Russian President Vladimir Putin attends an annual televised call with the country's citizens dubbed “Direct Line with Vladimir Putin” at the Moscow World Trade Center studio in Moscow on June 30, 2021.
Sergei Savostyanov | AFP | Getty Images
Russian President Vladimir Putin said on Thursday that inflation is a problem facing Russia, and that the country's economy is overheating.
“There are some issues here, namely inflation, a certain overheating in the economy, and the government and the central bank are already tasked with reducing the pace,” Putin said at his annual “Direct Line” question-and-answer session with Russian citizens on Thursday. In comments translated by Reuters.
The consumer price index in Russia reached 8.9% in November on an annual basis, compared to 8.5% in October. This increase was mainly due to the rise in food prices. With the rise in the prices of milk and dairy products this year.
The weaker ruble – Following new US sanctions in November – also led to increased inflation, raising the cost of imports to Russia. At the same time, the massive increase in military spending has caused labor, supply and production shortages elsewhere, as workers demand higher wages.
“Of course, inflation is a worrying signal,” Putin noted in further comments. Reported by Interfax Translated by Google.
“Just yesterday, when I was preparing for today's event, I spoke with the head of the Central Bank, Elvira (Nabiullina), who told me that the rate was actually around 9.3%. But wages rose by 9% in real terms, and I want to emphasize this – in real terms minus inflation.” – The disposable income of the population also increased.
The Russian central bank is widely expected to raise its benchmark interest rate by 200 basis points to 23% – the highest level In a decadeup from 20% seen during the invasion of Ukraine in 2022 – on Friday, amid stubbornly high inflation in the war-focused economy.
Putin blamed international sanctions for the rise in prices, but also appeared to criticize the central bank, saying experts had suggested other tools could have been used to tame inflation, other than interest rates.
“Of course, external restrictions, sanctions, etc. also have an impact to some extent. They are not of major importance, but they are still reflected in one way or another (in higher prices), because they make logistics more expensive,” the head of state said, According to statements reported by TASS news agency Translated by Google. “But there are also subjective (factors), and there are our flaws.”
“We should have made these decisions in a timely manner. This is unpleasant and bad, actually rising prices, but I hope in general, by maintaining macroeconomic indicators, we can deal with this matter as well,” Putin said.
He added that the government and Russia's central bank were tasked with achieving a “soft landing” for the economy, which he insisted had generally performed well and could achieve 3.9-4% growth this year.
The International Monetary Fund expects Russia to achieve growth of 3.6% this year, before slowing to 1.3% in 2025.
“A sharp slowdown is expected to occur as private consumption and investment slow amid reduced labor market tightness and slower wage growth,” the IMF said.
On Thursday, Putin expected that economic growth in Russia would range between 2 and 2.5% next year.
