Russian central bank hikes rates to fight inflation fuelled by military spending

People buy fruit at a hypermarket in Moscow (AP)

Russia’s central bank has raised its key interest rate by a full percentage point to 19% to combat high inflation as government spending on the military strains the economy’s capacity to produce goods and services and drives up workers’ wages.

The central bank said in a statement on Friday that “growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services”.