Inflation

Russia:

Russia's inflation has been volatile over the past decade because of its reliance on commodity prices. During the 2008 crisis, capital inflows into Russia fell and Russia was heavily affected by depressed commodity prices, especially oil. More recently, falling oil prices between 2014 and 2015 lead to an increase in inflation leading to a heavy selling of the Ruble on the forex money thus increasing prices. Economists are cautious on their estimates of future economic growth in Russia. Because of Russia's reliance on the manufacturing of energy products, a drop in energy prices would easily lead fall in manufacturing output. This drop in manufacturing output would affect the services industry and would slow production of goods and services, causing prices to increase which would produce stagflation.

Ukraine





Ukraine's inflation is primarily affected by political uncertainty which has created limited production capacity, higher interest rates and poorly thought out economic policy. Recently, Ukraine's government has issued short-term debt with interest rates of 15%. Hyperinflation in the 1990's resulted from a lack of access to financial markets and monetary policy to spur the economy when output declined. New access to global financial markets lowered interest rates and increased credit in Ukraine in the mid-2000's thus lowering the interest rate. However, after the economic crisis of 2007-2008, capital inflows into Ukraine dropped significantly which caused Ukraine's currency, the hryvnia to depreciate. More recently, political unrest and falling energy prices have led to more inflation which has limited economic growth.