The war launched by President Vladimir Putin against Ukraine in February 2022 has now entered its fourth winter. In the early days, Moscow insisted confidently that the economy was “unshaken,” but reality is gradually revealing itself: the longer the conflict drags on, the more it inflicts pain on Russia in multiple dimensions. The impact is no longer confined to the battlefield or foreign economic reports; it has seeped directly into the daily lives of ordinary Russians, from large cities like Moscow to more remote regions. Many people are beginning to recognize that this is not the “swift operation” they were once told about, but a prolonged war of attrition that is making life harder every day.
The war is becoming more real to ordinary Russians
For much of the conflict, many Russians felt the fighting was distant—something happening outside their borders, far from their daily routines. That perception has changed. Today, regions in central and southern Russia regularly hear air raid sirens at night. Drone and missile attacks launched by Ukraine have become increasingly bold, targeting oil depots, energy facilities, and at times even residential areas. Such events were almost unheard-of in Russia for decades, and they are forcing citizens to confront the fact that the war is drawing closer—stripped of the “heroic” or “romantic” tones used in propaganda.
Neighborhoods losing electricity, fires erupting at fuel storage sites, and disrupted train routes have all become warning signs that the conflict is now knocking on Russia’s door.
Deep cracks appear in Russia’s economy after years of being concealed
During the first two years of the war, Russia’s economy appeared to be “holding up,” thanks to emergency fiscal measures. The government poured money into military factories, sharply increased wages for defense workers, and relied heavily on oil and gas revenues to offset the blow from Western sanctions. In 2024, wages in some sectors reportedly rose nearly 20%, giving many Russians the illusion that the economy was doing fine—perhaps even better than before the war.
But growth driven by war spending is nothing more than a thin blanket covering a feverish body. Beneath the short-term “prosperity” lie deeper structural problems the government cannot hide forever: businesses struggling to secure loans due to soaring interest rates, import shortages driving up prices across the board, and shrinking state revenues from oil and gas as sanctions intensify and global prices fall. Analysts warn that Russia’s economy is now operating in a state of “militarization,” meaning resources are increasingly funneled into the war machine while the civilian sector is starved and gradually weakened.
Rising living costs force Russians to change consumption habits
One of the clearest signs of economic deterioration is the sharp drop in household spending. Surveys from major Russian banks show that weekly grocery bills have doubled compared to a few years ago. But despite higher prices, the amount of food people buy has decreased significantly. Russians are cutting back on meat, dairy, fruits, and vegetables—items that were once considered basic staples.
A young woman near Moscow shared that she had to give up imported products, switch entirely to domestic goods, and drastically reduce spending on clothing and cosmetics because prices had become unaffordable.
This marks a major shift in a society long accustomed to easy access to international products. Data from X5 Group—the country’s largest supermarket chain—reveals that although revenue rose due to inflation, profits fell nearly 20% because of rising operating costs and shrinking consumer demand. The numbers point to an uncomfortable truth: Russia’s current “growth” is artificial. Prices are going up not because of stronger demand, but because the market is unstable and supply chains are strained.
Retail collapses as purchasing power plunges
Since the war began, more than 1,000 international brands have withdrawn or suspended operations in Russia, leaving a massive void in the retail sector. But the strongest blow came this year, when domestic brands also began shutting down. Reports show that nearly half of Russia’s fashion stores have closed in recent months. The electronics market—crippled by shortages of imported components—has fallen to its lowest level in almost 30 years. Russians are delaying major purchases like smartphones and home appliances, leaving many retailers with no choice but to shut down or scale back.
Automotive and energy sectors—two vital pillars—take heavy damage
Russia’s auto industry has nearly collapsed as global automakers exited the country. Car prices have surged due to taxes and the cost of imported parts, driving sales down by almost 25% this year. Imported cars and electric vehicles have become luxury items, inflated by environmental taxes, import duties, and shipping costs.
Meanwhile, the energy sector—Russia’s largest source of revenue—is taking repeated hits from Ukrainian drone attacks. These strikes have damaged refineries, export ports, and fuel depots, with some drones reportedly flying thousands of kilometers into Russian territory. As a result, domestic fuel prices have spiked, and some regions are even experiencing shortages. This disruption affects everything from transportation and logistics to industrial production.
Heavy industry falls into a quiet crisis
Key industries once seen as Russia’s “backbone”—steel, mining, and machinery manufacturing—are also declining. Domestic steel consumption has dropped more than 14%, and demand for machinery has fallen by up to 32%. The coal industry, a major employer in several regions, is experiencing its worst period in a decade, forcing many companies to cut production.
These declines are more than economic statistics—they threaten hundreds of thousands of jobs, reduce incomes, and expose industrial regions to prolonged recession.
Russian banks face rising bad-debt risks
The Central Bank of Russia has warned that corporate non-performing loans have surpassed 10%, amounting to more than $100 billion. This indicates that many businesses can no longer repay debts due to falling revenue and rising costs. Consumer loan defaults have also risen to 12%, showing that households are borrowing more but struggling to pay back as incomes shrink.
Rising bad debt forces banks to tighten lending, creating a vicious cycle that makes business conditions even harsher.
The budget deficit widens as oil and gas revenues plunge
From January to October, Russia’s oil and gas revenue dropped more than 20% compared to the previous year. Falling oil prices, a stronger ruble, and new U.S. sanctions have shrunk Russia’s export markets. The U.S.—under the political scenario referenced in the article—has intensified pressure by sanctioning major corporations like Rosneft and Lukoil, deepening the impact.
As a result, the budget deficit has climbed to nearly 2% of GDP and could reach 2.6% by year-end. To fill the gap, the government has issued large volumes of high-interest domestic bonds and is even preparing to issue yuan-denominated bonds.
New tax burdens fall on citizens and businesses
Even as ordinary Russians struggle, the government is preparing to raise VAT and expand taxation, hitting small businesses and consumers hardest. New technology taxes on electronics and increased car-purchase taxes are also on the way. This signals that prices for goods and services will continue to rise.
Reports suggest that the Kremlin has instructed state media not to mention Putin’s name when covering these tax measures—an indication that authorities are aware of growing public dissatisfaction.
Russia has not “collapsed,” but the economy is entering a period of deep weakening
Despite mounting challenges, experts say Russia is not on the brink of an immediate economic meltdown. However, the downward trend is clear and will likely continue in the coming years. A militarized economy weakens the civilian sector, oil-and-gas revenues are declining, war costs are rising, inflation remains high, taxes are increasing, and everyday life is becoming more difficult for ordinary citizens.
One Russian economist noted that the country is approaching a “warning threshold,” where the government may soon have to choose between sustaining the war or stabilizing the economy. And while that decision may not come right away, one thing is certain: Russians will continue paying the price for a war they never had a say in.
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