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Russian President Vladimir Putin acknowledged Wednesday that Ukrainian drone attacks deep inside Russia are causing visible damage to infrastructure and the economy, though he insisted the consequences are not critical and do not severely affect economic growth, which he pegged at around 1 percent.

Putin ordered the government to launch a reconstruction programme for warehouses and logistics capacity damaged in the strikes. At least 20 warehouses belonging to e-commerce giant Wildberries have been hit since Ukrainian President Volodymyr Zelenskyy announced the deep-strike campaign on June 25, forcing many small vendors to shut down after losing inventory to fires.

The campaign has also struck oil refineries, triggering fuel shortages. Moscow petrol stations have reimposed purchase limits, and Deputy Prime Minister Alexander Novak said Russia has begun importing fuel and authorised production of lower-grade standards to meet domestic demand. A temporary fuel export ban was introduced in late July, running through January 2027.

UK consumer price inflation climbed to 2.9% in July, its highest level in four months, after forecasts anticipated a jump driven by rising energy costs. Gas prices recorded their sharpest increase in nearly four years, propelled by the effective closure of the Strait of Hormuz during the US-Iran conflict and surging European demand amid a continental heatwave.

Core inflation, which strips out volatile energy and food prices, held steady at 2.6%, while food and drink inflation eased to 1.3%, its lowest rate in nearly five years. Cornwall Insight forecasts a further 4% rise in household energy bills when the October cap is set on 26 August. Oil prices have climbed back above $90 a barrel.

Separately, the Competition and Markets Authority opened probes into Trainline, Virgin Atlantic and RED Driving School over concerns about full price display. Inflation is projected to reach approximately 3.5% by year-end.

Eurozone annual inflation accelerated to 2.9% in July, up from 2.8% in June, Eurostat confirmed on Tuesday. Across the wider European Union, inflation climbed to 3%, also up from 2.9% the previous month.

Price pressures varied sharply across member states. Romania posted the highest annual rate at 8.2%, followed by Lithuania at 5.4%, while Sweden recorded the lowest at 0.3%. The Czech Republic had the second-lowest rate at 1.3%. Italy saw a slight easing, with inflation dipping to 2.9% from 3% in June.

In the United Kingdom, the consumer price index rose 2.9% year-on-year, up from 2.6% in June, with core inflation holding at 2.6%. Energy price increases were linked to the ongoing conflict with Iran. The European economy continued to expand in 2026 despite an energy shock, following 1.5% growth in 2025.

Global food prices are forecast to climb 11.8% this year and a further 4.8% in 2027, driven by conflict in the Black Sea region and extreme weather across Europe, according to Oxford Economics. The projected increase, while substantial, remains below the 14.2% surge recorded in 2022.

Cereals, which make up a quarter of the global food price index, face intense pressure. Wheat is expected to jump 36% year on year to $6.92 a bushel in the third quarter, while Coceral cut its EU-27 and UK grain harvest forecast to 286.6 million tonnes, down from 310 million tonnes in 2025. Germany's output alone is seen falling 7% after severe drought and heatwaves. Meanwhile, attacks on Russian and Ukrainian ports threaten 86 million tonnes of annual grain-export capacity, nearly 17% of global cereal exports.

Rising input costs compound the squeeze, with fertiliser prices forecast to rise 22% in 2026 and diesel surging 36% year on year in July. Fresh-food prices could begin reflecting the disruption between October and November, with processed foods hit hardest between February and May 2027.

British Prime Minister Andy Burnham pledged the UK will continue to support Ukraine "100%" despite Russian warnings of consequences, after reports that British-made drones were used in strikes deep inside Russia.

The Russian Embassy in London warned Westminster would "pay" following weekend claims that UK-manufactured drones hit Russian targets for the first time. Ukrainian President Volodymyr Zelenskyy said forces struck an oil facility in Ust-Luga and Russia's Progress rocket and space centre over the weekend.

London announced in June it would deliver 150,000 drones to Ukraine by year-end as part of a £752 million support package. Meanwhile, Russian missile strikes on Pechenihy village in Kharkiv region killed at least 10 people and injured 18 on Tuesday, with regional head Oleh Syniehubov reporting 10 houses and multiple vehicles damaged in the attack involving two cruise missiles.

Gasoline and diesel were available at only 28.1% of Russian petrol stations by the end of last week, down from 41% a week earlier, as fuel shortages returned to parts of the country after Russia received its first Indian gasoline shipment earlier this month.

At least six regions imposed or tightened fuel-sale restrictions between August 10 and 15, with Kaluga and Lipetsk introducing odd-even rationing by licence plate. Long queues have re-emerged at stations in at least 18 regions since the start of August. To boost domestic supply, the St. Petersburg exchange began trading lower environmental-grade gasoline — Euro-2 through Euro-4 — from August 18, a move the Russian Energy Ministry said would remain in place until at least July 2027.

The squeeze is set to deepen in September, when major refineries including TAIF-NK in Tatarstan are scheduled for maintenance, while Belarus's Novopolotsk refinery — a key supplier — is also shutting for planned repairs.

Ukraine's defence ministry said on Sunday it had knocked out seven of Wildberries' ten largest logistics centres, after the latest overnight drone barrage struck the company's 250,000-square-metre warehouse complex in Koledino, near Podolsk in the Moscow region. Wildberries confirmed the attack caused a fire and forced it to reconfigure supply chains, while regional governor Andrei Vorobyov said the blaze had been extinguished. A second warehouse in nearby Domodedovo was also hit the same night, and Moscow mayor Sergei Sobyanin said at least 187 Ukrainian drones were shot down over the wider area, where other strikes damaged shops and homes, wounding three people.

Since the campaign opened on the weekend of 18 July with strikes in Elektrostal and the Tambov region, roughly 20 Wildberries sites have been attacked, including facilities in Yekaterinburg, Bashkortostan, the Vladimir region, Penza, Ryazan, St Petersburg and Crimea. Kyiv says the aim is to disrupt military supply chains and apply financial pressure on lenders including VTB and Sberbank, which hold about 13 billion euros in Wildberries debt, against the company's reported annual turnover of 70 to 75 billion euros.

Russia has constructed at least 10 secret military bases equipped with newly built launch platforms for advanced long-range attack drones near its borders with Ukraine and Belarus, placing multiple NATO capitals within striking distance.

An investigation identified at least 59 launch rails across the sites, with roughly 20 extended to accommodate the latest Russian jet-powered drones. Some facilities were converted from existing military or civilian airfields, while others were built directly in rural areas. Certain bases are already being used to launch intensive strikes against Ukraine, and one site alone has capacity to store more than 1,000 drones simultaneously.

The most capable variants could reach Warsaw, the Baltic states, Romania, and Turkey. European and U.S. intelligence officials believe Moscow is contemplating an armed provocation on Polish soil, with analysts warning of potential false-flag operations.

Andrei Klepach, chief economist at Russia's second-largest bank VEB.RF for 12 years, was dismissed on August 16 after delivering a stark assessment of the country's economic trajectory, Klepach confirmed to Forbes.

In a May 21 presentation to the Nikitsky Club, Klepach warned that Russia was falling behind China and the United States economically, and in certain areas trailing Ukraine. He cautioned that Russia would not prevail in a prolonged economic war with its neighbor. The dismissal came on direct orders from the Kremlin, according to The Bell.

The firing follows mounting fiscal pressure. Russia's budget deficit reached 5.87 trillion roubles in the first four months of 2026, already surpassing the government's target for the entire year.

Six Russian civilians were killed and four wounded, including a 14-year-old, when a Ukrainian missile struck the village of Koloskovo in Belgorod's Valuysky district on Monday, acting regional governor Alexander Shuvayev said. The strike, which targeted a Wildberries logistics site and reportedly employed British-made Nyan jet drones, ignited a building and damaged a vehicle.

Ukraine has disabled seven of Wildberries' ten largest facilities over recent months. In retaliatory strikes, Russian forces hit ports in Odesa and Izmail, damaging a Togo-flagged cargo vessel and, according to Moscow's defence ministry, destroying a Tarantul patrol boat, fuel depots, and naval drone warehouses. A separate Russian drone attack on a Nova Poshta branch in Kramatorsk killed one person and wounded four.

The Russian foreign ministry rejected a Ukrainian proposal, relayed via Turkey, for mutual restraint on Black Sea civilian targeting, as Kyiv offered through a third party to halt strikes on non-military maritime targets.

European Union foreign policy chief Kaja Kallas will propose the most far-reaching sanctions list against Russia since the start of the war this autumn, she told Die Welt, aiming to increase the number of sanctioned Russian entities by a third.

Kallas said existing EU measures have already cost Russia's war machine more than one trillion euros. The bloc currently sanctions around 3,000 individuals and entities, a figure that would rise sharply if the new package is adopted. She [accused Moscow of