Many Russians are tightening their New Year spending this year at a time of economic uncertainty after nearly four years of war in Ukraine, despite a slowing official inflation rate and falling prices for some staples.

Inflation is expected to drop below 6% this year from 9.5% in 2024, but at the cost of a sharp economic slowdown as the key interest rate has for nearly half of 2025 remained at its highest since the early 2000s.

Russia's economy has also been hit by Western sanctions since Moscow annexed Crimea from Ukraine in 2014 and after it sent troops into Ukraine in February 2022.

"I understand that this is the situation in the country now, but what can we do? You still need to eat," said Nadezhda Siverskaya, a 70-year-old pensioner from a town just outside Moscow who earns extra income as a housemaid.

"We either choose something cheaper, depending on what we're going to cook, or simpler food," she said as she chopped ingredients for Russians' favorite New Year salad, including potatoes, eggs, sausage, pickled cucumbers and mayonnaise.

THE COST OF A POPULAR SALAD

The government has targeted staples such as potatoes and eggs in a set of policies aimed at curbing price growth. Potato prices fell by 22% this year and egg prices by 20%.

The overall cost of the popular salad will rise by 5% this year, compared with 8.5% in 2024, according to calculations by the RIA Novosti news agency based on median prices.

Some people have noticed a difference from the previous year, when price growth was getting out of control, giving some credit to the authorities and retailers for keeping prices in check in 2025.

"We understand that everything is kept more or less within the inflation rate. To be honest, I can't say I've noticed any significant price increases over the past year," said Moscow resident Elena, who declined to give her last name.

Despite these successes, inflation expectations - an important gauge that the central bank takes into account when it sets the key interest rate - have risen over the past two months and remain stubbornly high.

A central bank official, speaking to Reuters on condition of anonymity, said people tend to notice price increases while ignoring price declines. A planned increase in some taxes at the start of 2026 is also weighing on sentiment.

A December poll by independent pollster Levada showed that 34% of Russians described rising prices and taxes as the most important event of 2025, ranking it above a Russia-U.S. summit in Alaska in August and Ukrainian drone attacks on Russia.

"This year we're definitely not buying red caviar because the prices are so high," said Moscow resident Karen, who also declined to give his last name, referring to a caviar made from salmon roe which is a popular New Year treat.

He said his family had switched to shopping online, which is generally cheaper than shopping in traditional stores.

Writing by Gleb Bryanski, Editing by Guy Faulconbridge and Timothy Heritage/Reuters