Rise in housing and utility costs by 30% leaves residents reporting dismal numbers
In a move aimed at reflecting rising resource costs and the need for infrastructure upgrades, the Russian government has announced a planned increase in utility and municipal service rates across the country [1]. The hike, part of a government directive approved in November 2024, is set to take effect from July 1, 2025.
The extent of the increases varies by region, with some cities facing significantly higher rates. For instance, Omsk and Izhevsk are expected to see an increase of nearly 40% and 38%, respectively, while the average tariff increase across Russia is approximately 11.9% for the year 2025 [1]. Moscow and St. Petersburg will see a 15% increase, and the Moscow region a 13% increase. Local authorities have some discretion in setting rates within the federal limits, meaning the actual hike can differ significantly across municipalities.
This hike follows the government’s planned indexation of utility rates to keep pace with inflation and infrastructure needs [1]. Expert Konstantin Krokhin reported that the new rules aim to ensure tariffs reflect the real economic situation, not just average data from Rosstat. The increase in utility bills is also due to factors such as inflation and gas price trends. It's important to note that the actual inflation rate in Russia is significantly higher than the official one.
In addition, utility tariff indexing will no longer be solely tied to forecast inflation but also gas price dynamics. This change is expected to affect utility bills in Russia. A trick to reduce utility bills by 30% has been suggested, but it's unclear how this can be achieved given the planned increases.
Resource-supplying organizations are currently incurring losses due to economic instability. There is also a hidden line item in utility bills that could be draining money from Russians. The low wages of utility workers in Moscow have caused tension in the industry and require wage adjustments due to their wages being 1.5 to 2 times lower than the city average.
Experts predict that tariff increases have already reached 20% and could reach 30% by 2026. For those with utility bills over 2,500 rubles, a potential increase of 5,000 rubles is expected on July 3rd. It's crucial for individuals and families to budget accordingly to manage these upcoming increases.
[1] Source: Russian Ministry of Construction and Urban Development, November 2024.
In response to the government's adjustment of utility rates to match inflation and infrastructure requirements, various regional cities such as Omsk and Izhevsk are eligible for utility rate increases of nearly 40% and 38%, respectively [1]. Simultaneously, personal-finance experts suggest it's essential for individuals and families to anticipate and manage these utility bill increases as they may potentially surge by 30% by the year 2026.
As the Russian government contemplates indexing utility tariffs according to gas price trends, the finance industry is closely monitoring the potential impact of these changes on the energy sector and personal-finance management in Russia.
