Oyster Bar built a thriving business serving molluscs to well-heeled Muscovites. Then came Western sanctions, and the restaurant was forced to rechristen itself this autumn. Today, it serves up burgers and pizza under a new name: No Oyster Bar. Co-owner Ilya Sokhin said a Russian ban on European oyster imports hit hard, and the average bill at his restaurant - a sleek new building in the famous Gorky Park - has more than halved. Russia's economy has been battered this year by uncertainty over the conflict in Ukraine, the falling price of oil, Western sanctions and retaliatory Russian import bans. Poor and middle-class Russians are increasingly challenging government insistence that a 40 per cent drop in the value of the rouble - now worth a record low of 54 to the US dollar - will affect mainly the rich. Approval ratings have so far remained high for President Vladimir Putin, who has staked his reputation on Russia's re-emergence as an economic powerhouse after the turbulent 1990s. Yesterday he mounted a robust defence of his foreign policy, in his annual state of the union address, trumpeting his annexation of Ukraine's Crimea peninsula and accusing Russia's enemies of seeking to destroy its economy through sanctions. Feisty though it was, the speech is unlikely to mollify middle-class families and even poorer Russians as their quality of life declines. Mikhail Antonov, 27, a store manager, had saved up this year to drive with friends from Moscow to Germany, and spend a week visiting Christmas markets. But the 30,000 roubles he squirrelled away have gone from being worth €670 (HK$6,395) at the start of the year to less than €450 (HK4,295) today. He has axed the trip. "This would have been my first trip abroad and my girlfriend and I had saved up," he said. "Now, because of the situation in Europe and Ukraine, everything has got more expensive and our savings have been reduced to nothing." According to Vladimir Kantorovich, vice president of Russia's Tour Operator Association, travel abroad for the winter holidays is down 30 per cent, and trips to Europe have halved. On Wednesday, Russia's flagship airline, Aeroflot, hiked its rouble-denominated prices by 15 per cent. Olga Kupriyanova, 35, a law professor, says her family of four feels the pinch, particularly when it comes to putting food on the table. Inflation is estimated to reach 10 per cent by early next year, and food is rising fastest. According to the Federal Statistics Service, chicken costs 27 per cent more than it did last year, pork 25 per cent, and the beloved staple of buck wheat 48 per cent. Russians on average spend about 30 per cent of their income on food, compared with 6.7 per cent in the United States. "We've started to economise on food, but our expenses have grown by about 10 per cent," said Kupriyanova, who has replaced red meat with chicken and cut most cheese and fish out. Russia's economic woes stem from a host of problems. First, oil and gas exports, which finance half of its budget, have been hit by the plummet in world markets: the global price of crude oil has fallen some 25 per cent since the summer. Analysts say if prices remain so low, Russia could see its economy shrink by three per cent next year. Second, its banks, which were slapped with sanctions this summer as a response to Moscow's role in Ukraine, have to pay off US$90 billion in external debt before the end of next year, which is becoming harder by the day as the rouble loses value. The central bank had tried to support the rouble but after spending US$29 billion in October alone, it gave up and floated the currency last month. Finally, Russia banned Western meat, dairy, vegetables and fruit this summer in response to the sanctions, helping drive the steep spike in prices. On Tuesday , its economic development ministry revised its forecast for 2015, predicting a drop of 0.8 per cent instead of 1.2 per cent growth. Finance Minister Anton Siluanov said the sanctions are costing Russia US$40 billion a year, and falling oil prices another US$90-$100 billion. Politicians and state-run television have pushed a narrative that only the rich will be affected by the depreciation of the rouble. But slowing growth and rising inflation have affected average Russians like Kupriyanova and Antonov, who both earn less than the average Moscow salary of 50,000 roubles a month, now worth about US$925. "Politicians are trying to make the best of the situation, but this attacks low-income households more than middle- and high-income households," said Konstantin Sonin, an economist at Moscow's Higher School of Economics. "They spend more on consumption and food, and they are the most vulnerable." While a recent poll by the independent Levada Centre showed over 50 per cent of Russians would vote for Putin if elections were held tomorrow, no one doubts that he is coming under increasing pressure to act. One joke making the rounds on Russian social media: "What do Putin, the price of oil, and the ruble have in common? They'll all hit 63 next year."