Russia's fuel crisis is fueling concerns that the country's economy is slipping into stagflation, as accelerating inflation coincides with slowing growth and policymakers face increasingly difficult tradeoffs over interest rates and fiscal policy.
The disruption, triggered by the loss of a significant share of Russia's refining capacity, has pushed up business costs, weakened industrial output and raised the risk that the economy could enter a prolonged recession, according to economists, analysts and recent business surveys.
The latest signs of deterioration emerged in June, when the Central Bank's monthly survey of thousands of businesses showed a sharp drop in business activity.
The survey's business climate indicator fell deep into negative territory, a level that investment banker Yevgeny Kogan said has historically coincided with economic crises.
"It appears the fuel crisis has pushed the economy into recession," analysts at the Moscow-based MMI research group wrote in a commentary.
