In bright sunshine, a long queue of shoppers snaked outside an Ikea store near Moscow this week. Similar scenes were repeated across Russia as families rushed to spend their fast-depreciating roubles at the Swedish retailer which is leaving the country.
Russians are bracing for an uncertain future of spiralling inflation, economic hardship and an even sharper squeeze on imported goods.
The rouble has lost a third of its value this week after western sanctions were imposed to punish Russia for invading Ukraine. The moves froze much of the central bank's $640 billion in reserves and barred several banks from global payments system Swift, sending the rouble into free-fall.
Cities across Russia were outwardly calm, with little sign of the crisis in the financial sector and markets. Except for the lines of people looking to stock up on products – mostly high-end items and hardware – before shelves empty or prices climb further.
"The purchases that I planned to make in April, I urgently bought today. A friend from Voronezh also told me to buy for her," shopper Viktoriya Voloshina told Reuters in Rostov, a town 217 kilometres from Moscow.
Ms Voloshina said she was looking for office shelves and tables. "My heart is breaking," she said.
Dmitry, another Moscow resident, lamented rapid price rises. "The watch I wanted to buy now costs around 100,000 roubles, compared to 40,000 around a week ago," he said.
But the spending burst this week may peter out.
While there is no palpable sign of panic, the wipeout of rouble savings and the doubling of interest rates to 20 per cent will squeeze mortgage holders and consumers.
Financial conditions – reflecting availability of credit in the economy – have tightened this year, which Oxford Economics predicted would shrink domestic demand by 11 per cent by year-end and increase unemployment by 1.9 percentage points in 2023.
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Damage after the shelling of buildings in central Kharkiv, Ukraine. EPA -
Workers from a local construction company weld anti-tank obstacles to be placed on roads around Kyiv as Russia's invasion of Ukraine continues. Reuters -
Anti-war protesters attach sunflowers to barriers in front of the Russian embassy. Reuters -
Ukrainian volunteers prepare food for displaced people outside Lviv railway station in western Ukraine. AP -
A Ukrainian soldier holds an anti-tank launcher north-east of Kyiv. AFP -
Ukrainian refugees rest at Warsaw East train station in Poland. EPA -
Children look out from a carriage window as a train prepares to depart from a station in Lviv to the town of Uzhhorod near the border with Slovakia. AFP -
A girl who fled Ukraine is reunited with her father in Medyka, south-eastern Poland. AP Photo -
Tears outside a house damaged by a Russian airstrike in Gorenka, on the outskirts of Kyiv. AP Photo -
A civil defence member is poised to shoot as a vehicle approaches a checkpoint in Gorenka. AP Photo -
A Ukrainian civil defence member in the garden of a house damaged by a Russian airstrike. AP Photo -
Members of the US Army 3rd Infantry Division board a plane bound for Germany in Savannah, Georgia. EPA -
Prayers for peace in Ukraine at the Vatican's Saint Peter's Square. AFP -
A woman (right) hugs an arriving passenger from a train carrying refugees at Berlin's central station. EPA -
Firefighters battle a blaze in a Kharkiv police building hit by shelling. AFP -
A Ukrainian woman makes a phone call after crossing the Slovakian border. AFP -
A doctor takes shelter in the basement of a Kyiv perinatal centre. Reuters -
Debris which locals say was caused by shelling in separatist-controlled Horlivka, Donetsk. Reuters -
MPs in London give a standing ovation to Ukraine ambassador Vadym Prystaiko, who was in the public gallery. AP -
Distraught women and children fleeing Ukraine wait to enter Poland at the Korczowa crossing. Getty -
Newborn Ivan lies next to his mother as they shelter in the basement of a Kyiv perinatal centre. Reuters -
Firefighters hand water to people in a Ukrainian train full of refugees in Przemysl, Poland. Reuters -
Ukrainian refugees queue to file for residency permits at Prague's police headquarters. AFP -
Firefighters work to contain a blaze in buildings housing the Kharkiv regional police department. AFP -
A woman and her children sit in a tent in the Kyiv subway, using it as a bomb shelter. AP -
Firefighters work to extinguish a blaze at the Kharkiv National University building, which city officials said was damaged by Russian shelling. Reuters -
An elderly woman comforts a child as they take shelter inside an underground station in Kyiv. Reuters -
People queue at a pharmacy in central Kyiv. Reuters -
A woman is consoled by a volunteer after fleeing from Russia's invasion of Ukraine, at the border crossing in Siret, Romania. Reuters -
A Ukrainian civilian in the city of Zhytomyr practises throwing petrol bombs. Reuters -
Ukrainian President Volodymyr Zelenskyy poses after an interview with Reuters in Kyiv. Reuters -
A blast is seen at Kyiv's TV tower. Reuters -
A girl in Siret, Romania, covers herself with a blanket after fleeing from Ukraine. Reuters -
Ukraine's ambassador to the US, Oksana Markarova, acknowledges applause from US first lady Jill Biden as they attend President Joe Biden's first State of the Union address in Washington. AFP -
A man walks past the remains of Russian military vehicles in Bucha, close to Kyiv. AFP -
Civilians cross a river on a blown-up bridge on Kyiv's northern front. Defending the capital is a 'key priority', Ukraine's president has said. AFP -
Russian aircraft on the ground at Luninets Airbase, Belarus, about 50 kilometres north of the Ukrainian border. AFP -
People look at the gutted remains of Russian military vehicles on a road in the town of Bucha. AP -
A woman with a child who fled from the war in Ukraine reunite with their family after crossing the border in Medyka, Poland. AP -
Animal keeper Kirilo Trantin comforts an elephant at Kyiv Zoo. AP -
An armed man stands by the remains of a Russian military vehicle in Bucha. AP -
Ukrainian families say goodbye as they prepare to board a bus to Poland at Lviv, western Ukraine. AP -
Paramedics move a man who was wounded by shelling in a residential area of Mariupol, south-eastern Ukraine. AP -
Rescuers work at the site of a Russian strike in Zhytomyr. Reuters -
US actor and director Sean Penn attends a press briefing at the Presidential Office in Kyiv. Reuters -
Demonstrators participate in a protest against Russia’s invasion of Ukraine at Lafayette Square in Washington. AFP -
Ukrainian soldiers rest while others eat near the front line with Russian troops in northern Kyiv. AP -
A barricade made of trams, buses and sand bags is seen through the window of car in the northern part of Kyiv. AP -
Members of the European Parliament applaud after Ukrainian President Volodymyr Zelenskyy's speech at a special session to debate its response to the Russian invasion of Ukraine. Reuters -
Ambassadors and diplomats walk out as Russia's Foreign Minister Sergey Lavrov (on screen) speaks during a recorded message at the 49th session of the UN Human Rights Council in Geneva. EPA
Zach Witlin, an analyst at Eurasia Group, notes sanctions are already hitting consumers with price rises and disruptions to digital payment services.
While consumers are not the direct target, "fear and caution are exaggerating the impact", with the departure of foreign brands such as Ikea creating a snowball effect, he said.
Imports to isolation
Cars, machinery and car parts comprised nearly half of Russia's $293bn imports last year, according to the Federal Customs Service.
The government's strenuous import cutbacks in recent years mean 2021 imports remained 7 per cent below 2013 levels, before the first sanctions following Russia's 2014 annexation of Crimea.
It has also beefed up trade with China, which is the only country to boost exports to Russia since 2014.
But further declines look inevitable as the rouble plunges, insurers refuse cover to businesses exporting to Russia and shippers back away from Russian ports whether to export or to import.
While only a few Russian companies are the targets of sanctions "all of them will feel the chilling effect," said Matt Townsend, sanctions partner at law firm Allen & Overy. "This is why sanctions are a very effective measure to isolate a country."
The immediate economic shock will cause a 35 per cent GDP contraction in the second quarter and a 7 per cent decline in 2022, JPMorgan predicted. But "growing political and economic isolation will curtail Russia's growth potential in years to come," it said.
That may come about if restrictions "limit the acquisition of technology needed to support Russia's highest value industries," RBC Global Asset Management said.
The Biden administration is preparing rules to weaken Moscow's ability to import smartphones, aircraft parts and auto components.
freelance worker from Rostov
But multinationals, from tech firms Apple and Microsoft to consumer goods producers Nike and Diageo, have severed links with Russia, meaning shoppers will have limited access to the consumer goods they have grown accustomed to over three decades.
Chinese companies, so far staying put, could grab some market share but they, too, could fall prey to secondary sanctions as many of their products such as smartphones use technology of US origin.
