The Moscow Times reports:

In August 2005, Susie Clark rented a two-room, European-style apartment in Polezhayevskaya, a quiet area of Moscow three metro stops outside of the Circle Line. The apartment cost $900. Two and a half years later, the owners of the apartment are offering it for rent at 1,200 euros ($1,765), a rise of nearly 100 percent. Once adjusted to take account of the depreciating dollar, the actual rise is closer to 75 percent. "That's a pretty huge increase," said Clark, a London-based advertising executive. She gave up the apartment last week.

But few are surprised. Moscow rental prices, particularly in central areas, have been climbing at unprecedented rates. While a 100 percent increase in 2 1/2 years may not be the norm, it certainly isn't the exception. Inflation shot up by nearly 12 percent last year, the highest since 2003, according to figures released by the State Statistics Service this week. In a presidential election season, it is a figure that the government would prefer to forget.

No immediate relief is in sight. For now, the government is hanging on to its target of 8.5 percent for this year, but few economists believe that it will be achievable. Inflation is expected to remain high, particularly in the first half of the year, with year-end forecasts varying from 9.5 percent to 12 percent. The government's challenge now, said Alexander Morozov, an economist at HSBC, is to figure out how to bring inflation back down in 2009. Economists broadly agree that the state's loose monetary policy was one of the primary drivers of inflation last year, while the government has pinned the blame on external factors, such as poor grain harvests, combined with intensified global demand for grain, and higher costs of food imports.

In October, when the specter of spiraling inflation became all too real, the Kremlin jumped in with measures to target rising prices, including an appeal to food wholesalers and producers to freeze prices until the new year and a decision to cut import tariffs on some goods. Yulia Tseplyayeva, an economist at Merrill Lynch, said these measures were largely "cosmetic" and failed to address the underlying reasons for inflationary pressure. "The government is not ready to take more aggressive measures to tighten fiscal and monetary policy," she said. Nevertheless, official figures indicate that the growth in food prices actually slowed in December, suggesting that the government's inflation-busting measures did have some effect.

In many areas of the economy, prices are rapidly outstripping inflation. Over the past year, sunflower-oil prices have leapt by 52.3 percent. Milk rose by 30.4 percent, while bread prices increased by 22.4 percent. Local amenities, such as heating, rose 14 percent in 2007. "The prices that are rising now are really hitting families and those on medium salaries. It does create some tension," said Clemens Grafe, an economist at UBS. "There is a good reason why for the first time we've really seen strikes last autumn or early winter."

Anecdotal evidence suggests that higher-end activities, such as leisure and restaurants, have substantially increased in price. Some banyas, for instance, raised their prices by up to 40 percent last year. "Sometimes people use the inflation factor as a reason to increase pricing -- often even higher than real inflation," said Tobias Weigl, a German citizen who works for DHL in Moscow. Rent, however, remains the largest single expense for many Moscow residents.

One British expatriate, who until recently rented a two-room apartment in the central Smolenskaya area, said it cost $500 per month to rent in 2003 and now costs 1,000 euros ($1,470) per month, an increase of nearly 200 percent in four years. Salaries are simply not keeping pace. Tseplyayeva said many people were losing out because their wages are not rising in line with inflation. "On average, wages grew about 15 percent in 2007 across the public and private sector," she said. "But these are average figures." Evans, a real estate agency that caters to top-end rentals, said rental rates had risen by 30 percent on average in the premium market.

Anya Levitova, the agency's founding partner, said it was unheard of two years ago to attract renters willing to pay around $25,000 per month. Last year alone, she said, Evans secured 10 deals for rents of $23,000 or more. A one-bedroom apartment just outside of the city center, meanwhile, cost around $700 a year ago, compared with $1,200 now, Evans said. Part of the problem is that property prices are stabilizing, so investors are keen to sell before house prices go down, leading to a supply glut, real estate agents said. Previously, investors would buy properties, rent them out while the prices appreciated, and then sell them on. The good news is that price rises should start to slow. "Tenants won't support that growth," Levitova said, adding that over the next year, she expects rent increases to broadly keep pace with inflation.

But Russians could care less. Time to party and wallow in profligate waste! The MT continues:

The extended New Year's holiday cost the economy 700 billion rubles ($28.5 billion), or about 2 percent of the gross domestic product, economists said Thursday. Most businesses across the country shut down for the 10-day holiday, which began Dec. 30 and ran through Jan. 8, the day after Orthodox Christmas. In addition, the regular work week got off to a slow start Wednesday, with many workers putting off their return to work until next week. Some of those who did come back found it difficult to get into the swing of things after the long break. Vladimir Bragin, an economist at Trust Bank, said the slowdown in economic activity costs Russia dearly. "I think that 10 days of pure holidays mean about 20 days of stress and hangovers. This is too high a price," Bragin told Russia Today television.

In comparison, the Christmas holiday in Britain costs the local economy only $1.5 billion.