Russia’s economy is facing a severe crisis, former Ukrainian banking chief Kyrylo Shevchenko has said, pointing to fuel prices which have soared by 14.6% for gasoline and 11.4% for diesel since January. Mr Shevchenko, the former chief of the National Bank of Ukraine, attributed this surge – the sharpest in 13 years – to a combination of higher excise taxes, strict export bans, surging inflation, and Ukrainian drone strikes targeting key oil refineries, which he said has “sent costs skyrocketing”.

Posting on X, he warned: “Analysts warn prices could climb another 7–10% by summer. For a country that prides itself on being an energy superpower and rich in gas and oil, Russia is now struggling to provide for its own people.” Mr Shevchenko, who also shared a dramatic clip of the blaze, was speaking on the same day the Caspian Pipeline Consortium (CPC) reported that the Kavkazskaya oil pumping station in Krasnodar Krai was rendered inoperative due to a drone attack on March 19, leading to significant infrastructure damage and a raging fire.

Firefighters are still combating the blaze, which has consumed 2,000 square meters, with storage tanks and their contents still aflame. Prior to this, the Kropotkinskaya station, the largest in the CPC network, was also attacked on February 17, further exacerbating the supply crisis.

Such incidents have reduced the anticipated annual transportation volume, with the CPC acknowledging that full restoration may not be feasible in the near future.

Inflation has surged, with consumer prices increasing by 0.67% in the first two weeks of 2025, driven by hikes in liquor, food, and public transportation costs.

Notably, vodka prices rose by 3.7%, cucumbers by 8.6%, and subway fares by 8.2%. The central bank’s decision to maintain the benchmark interest rate at 21%, the highest in two decades, underscores the severity of the inflationary pressures.

Persistent inflation is eroding the purchasing power of ordinary Russians, particularly affecting basic foodstuffs and essential goods.

The economic turmoil has led to widespread public discontent. Many Russians are tightening their belts, especially during festive seasons, as the prices of staples like butter, potatoes, and chicken have rocketed.

This situation disproportionately impacts the poorest segments of society, forcing some to forgo traditional holiday foods and celebrations.

The government’s struggle to stabilise the economy has led to a loss of confidence among the populace, with increasing numbers seeking better opportunities abroad.

A combination of soaring fuel costs, rampant inflation, and disrupted oil production presents a formidable challenge to Russia’s leadership.

Speaking to Express.co.uk in January, George Barros, Russia Team & Geospatial Intelligence (GEOINT) Team Lead at the Institute for Study of War in Washington, has no doubt Russia’s economy was on the rocks.

He told the Express: “Fundamentally, Vladimir Putin did not prepare to wage and sustain a protracted war. He thought this was going to be a war of six months maximum and what we’ve really seen is the absence of a long-term strategy.

He explained: “The bottom line is, Russia has been cannibalising the national wealth that Putin built for Russia, starting in around the 2000s with the high oil prices that Putin used to build the sovereign wealth fund. Russian inflation is out of control. Right now, the central bank overnight lending rate is 21%, which is insane.”