Russia can boost its economy by 7-8 trillion roubles ($85-97 billion) without stoking significant inflationary risks, a senior official said on Wednesday, as Moscow deals with supply curbs, a fall in oil production and manufacturing output slows.

Annual inflation in Russia has spiked to a seven-year high of 16.70 per cent, while the rouble and external trade have dropped after Western countries imposed sanctions over the Ukraine conflict.

Russia hiked its key interest rate to try to curb volatility, introduced capital controls, banned foreign holders of Russian assets from selling investments and offered over 1 trillion roubles in social payments and support to businesses.

“We have certain macroeconomic limits under which we are working,” First Deputy Prime Minister Andrei Belousov said. “We have more or less understood the limits allowing us to work without increasing pressure on inflation.”

Some Russians rushed to snap up essential food items in the first days after Moscow launched what it calls its “special military operation” in Ukraine on Feb. 24.

By late March, demand for the most popular socially important goods started to stabilise, Belousov said.

Yet sugar and the so-called “borscht basket”, a Russian version of the Big Mac index which contains the most popular daily food items including potatoes, onions, carrot and beetroot, spiked by 50 per cent-60 per cent after the sanctions, Belousov told the upper house of parliament.

Salt, flour and cereals increased in price by 10 per cent-20 per cent, with stocks now enough for five to six weeks, he said, compared with more than two weeks for sugar and 10-12 weeks for baby food and canned food.

Russian weekly inflation fell to 0.66 per cent in the latest week, Belousov said, after growing by an average of 2 per cent in the weeks after Moscow sent troops into Ukraine.

Inflation in Russia could reach 17 per cent-20 per cent this year and the economy may contract by more than 10 per cent, its deepest since 1994, according to Alexei Kudrin, the head of Russia’s audit chamber and a former finance minister.

Output volumes had fallen by around 11 per cent in the industry and trade sectors, with other sectors shrinking by 9-10 per cent, Belousov said without elaborating. Sources told Reuters earlier that Russian oil output hit its lowest since mid-2020 this week.

The energy ministry had earlier suspended publication of monthly oil and gas output figures, while the central bank stopped disclosing foreign trade data, cutting investors off from the most essential data about the state of the Kremlin’s finances.

Russia plans to use all funds available this year for support measures, Prime Minister Mikhail Mishustin has said, warning that there will be no budget surplus. Belousov said on Wednesday that budget spending has already increased by 20% in the first three months of 2022 from a year ago.

Meanwhile the Russian banks will be allowed to sell cash foreign currency to individuals from April 18, the central bank said, relaxing some of its regulation rules that were aimed at limiting a drop in the rouble. The central bank said individuals will be allowed to withdraw not only dollars but euros also from their accounts, keeping the maximum amount that can be withdrawn until Sept. 9 at the equivalent of $10,000.

Russia will scrap a 12 per cent commission on buying foreign currency through brokerages starting from April 11, Tinkoff bank and Alfa Bank said on Friday, after a sharp rally in the rouble raised concerns about its economic and financial impact.

The rouble has rebounded on the Moscow Exchange from record lows it hit in March to levels seen before Feb. 24, when Russia started what it calls “a special military operation” in Ukraine, as capital control measures suffocated demand for forex.

Tinkoff bank said the central bank ordered to scrap the 12 per cent commission from Monday in an instruction to brokerages.

Alfa Bank confirmed the report in its channel in Telegram messenger.

In early March, when the rouble was falling sharply as the United States and European countries imposed sanctions against Russia for sending troops to Ukraine, the central bank introduced a 30 per cent commission on buying FX for individuals. The commission has been later lowered to 12 per cent.

The Russian rouble on March 9 hit its strongest level against the euro since June 2020 after an unexpected central bank rate cut, but soon reversed gains and ended the day in the red, while stocks fell after the US Congress voted to ban Russian oil.

The central bank cut its key interest rate to 17 per cent from 20 per cent ahead of a regular board meeting scheduled for April 29, and said it was open to possible further cuts at upcoming meetings. The volatile rouble rallied shortly after the rate cut, which partially reversed the emergency rate hike that the central bank delivered in late February after Russia started what it calls “a special military operation” in Ukraine on Feb.24.