For much of the first two years of the war in Ukraine, Russia managed to shield its population from the full economic consequences of President Vladimir Putin’s invasion. Record oil revenues, aggressive state spending, currency controls, and a resilient shadow economy created the impression that Russia had weathered Western sanctions and adapted to wartime conditions.

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But that illusion is cracking.

A growing body of economic data—combined with rising prices, labor shortages, and declining household purchasing power—shows that ordinary Russians are now feeling real, tangible economic pain. The consequences of mobilization, international isolation, military overspending, and structural decay are now spreading far beyond the front lines.

This is no longer an abstract economic crisis confined to macroeconomic charts. It is hitting Russian families, workers, and businesses directly. Prices are rising. Wages are lagging. Imports are drying up. Shortages are returning. And the social cost of war is becoming harder for the Kremlin to disguise.

Russia is entering a new phase—one in which the war’s economic burden increasingly shifts to its own citizens.

A Labor Crisis of Historic Proportions

One of the most severe impacts is a worsening labor shortage. Multiple forces have converged to shrink Russia’s workforce:

Hundreds of thousands of men have died or been severely wounded in Ukraine
700,000 to over 1 million people have fled the country since 2022
Hundreds of thousands more were mobilized, removing them from the civilian economy
A demographic collapse predating the war has accelerated
Women are retiring earlier, reducing available labor
Migrants have left due to rising xenophobia and wartime conditions

The result is a labor market so tight that Russian businesses are now describing the shortage as unprecedented.

Consequences include:

factories unable to operate at full capacity
rising wages that businesses cannot sustain
surging demand for low-skilled workers
shrinking productivity
higher consumer prices

Economists warn that the labor crisis is a structural blow that will haunt Russia for decades.

The Cost of War Is Draining the Budget—and Citizens Are Paying the Price

The Kremlin’s defense spending has ballooned to levels not seen since the Cold War:

40% of federal spending is now military-related
Defense expenditure is expected to surpass social spending in upcoming budgets
Regional governments are forced to contribute to the war effort, cutting civilian programs

This has forced the Kremlin to make politically sensitive moves:

raising taxes on businesses
expanding “voluntary” corporate contributions
increasing VAT in certain regions
raiding the National Wealth Fund to plug gaps
cutting non-military spending in education, healthcare, and infrastructure

The result: everyday Russians are feeling austerity while the military absorbs national resources.

Inflation Is Eating Away at Household Budgets

Official inflation numbers are sanitized, but independent economists estimate that real inflation—especially for food and household goods—is significantly higher than government reports.

Pain points for consumers:

meat, dairy, fish, and vegetables have seen double-digit price increases
household goods cost more due to import barriers
electronics are up by 30–70%
foreign brands have vanished or become prohibitively expensive
rents are rising in major cities as wartime workers flock to regional hubs

Real disposable incomes have declined for many households despite nominal wage growth. The poorest Russians are hit hardest, with the cost of basic necessities rising faster than salaries.

Sanctions Are Finally Cutting Deep into the Economy

While Russia avoided immediate economic collapse in 2022, the cumulative effect of sanctions is now impossible to ignore.

Key impacts:

Technology shortages in microchips, sensors, heavy machinery, aviation, and automotive sectors
De-industrialization in sectors reliant on Western components
Costly reorientation to China, which sells goods at higher prices and on stricter terms
Limited access to global financial markets, complicating trade
Falling foreign investment and capital flight
A weakening ruble, which increases import costs

Russia’s “import substitution” campaign has filled some gaps, but many products are lower quality, more expensive, or simply unavailable.

Everyday Life Is Becoming More Difficult

For ordinary Russians, the war is increasingly felt in daily routines:

fewer consumer choices in supermarkets and malls
longer wait times for medical services
rising utility costs
declining quality of public services
reduced travel options after Western airlines and credit card networks withdrew
fewer job opportunities outside defense industries
slower access to medications due to supply chain disruptions

A sense of stagnation—mixed with anxiety—is spreading.

Russia’s Shadow Economy Cannot Mask the Decline Forever

The Kremlin has relied heavily on murky economic practices to keep the system afloat:

parallel import networks
energy exports through middlemen
dark-fleet oil shipments
sanctions evasion schemes via Turkey, China, and the Caucasus
off-the-books military procurement

But these measures incur enormous costs and cannot fully replace legitimate trade relationships. As enforcement tightens, Russia’s room to maneuver shrinks.

The War’s Biggest Economic Threat: Long-Term Decline

Short-term pain is only part of the story. The MIT-style long-term threat is structural collapse:

talent flight
collapsing birthrates
aging workforce
falling productivity
reduced innovation due to isolation
increased dependence on China
shrinking domestic market
deteriorating infrastructure
capital depletion

Russia is not simply experiencing a recession. It is experiencing strategic economic deterioration.

Public Frustration Is Growing, Quietly but Steadily

While Russians cannot protest openly due to harsh laws, surveys, leaked data, and independent polling show rising discontent:

more people now view the economy as the country’s biggest problem
trust in local officials is declining
frustration is rising in regions bearing disproportionate mobilization losses
younger Russians are increasingly pessimistic
small business owners are struggling with staffing and cost pressures

The Kremlin maintains tight control, but it cannot fully hide the growing cracks.

Conclusion: The War Has Finally Hit Home

For two years, Putin managed to protect ordinary Russians from the economic consequences of his war. But the façade is collapsing. The country is entering a phase where:

shortages will worsen
the labor crisis will deepen
inflation will persist
state budgets will strain
households will feel squeezed
social discontent will grow

The war’s true costs are now being paid not only on the battlefield, but in kitchens, factories, clinics, and households across Russia.

The pain is real. And it is spreading.

The War Comes Home: How Ordinary Russians Are Now Feeling the Deep Economic Pain of Putin’s Invasion