Russian President Vladimir Putin attends an annual televised phone-in with the country’s citizens dubbed “Direct Line with Vladimir Putin” at the Moscow’s World Trade Center studio in Moscow on June 30, 2021.
Sergei Savostyanov | Afp | Getty Images
Russian President Vladimir Putin on Thursday said 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 of the economy, and the government and the central bank are already tasked with bringing the tempo down,” Putin said in his annual “Direct Line” Q&A session with Russian citizens on Thursday, in comments translated by Reuters.
Russia’s consumer price index hit 8.9% in November year-on-year, up from 8.5% in October. The increase was driven principally by rising food prices, with the cost of milk and dairy products soaring this year.
A weaker ruble — following new U.S. sanctions in November — has also fueled inflation, driving up the cost of imports into Russia. Meanwhile, a massive increase in military spending has caused labor, supply and production shortages elsewhere that have pushed up prices, and prompted workers to demand higher wages.
“Of course, inflation is such an alarming signal,” Putin noted in further comments reported by Interfax and translated by Google.
“Just yesterday, when I was preparing for today’s event, I spoke with the chairperson of the Central Bank, Elvira [Nabiullina] who told me that it was already somewhere around 9.3%. But wages have grown by 9% in real terms, I want to emphasize this — in real terms minus inflation — and the disposable income of the population has also grown,” he said.
Russia’s central bank is widely expected to hike its benchmark interest rate by 200 basis points to 23% — the highest level in a decade, up from the 20% seen during the invasion of Ukraine in 2022 — on Friday, amid stubbornly high inflation in the war-centered economy.
Putin blamed international sanctions for price rises, but also appeared to criticize the central bank, saying experts had suggested that other tools could have been used to tame inflation, beyond interest rates.
“Of course, external restrictions, sanctions, and so on also have an impact to a certain extent. They are not of key importance, but they are still reflected in one way or another [in the rise in prices], because they make logistics more expensive,” the head of state said, according to comments reported by news agency Tass and translated by Google. “But there are also subjective [factors], and there are our shortcomings.”
“We should have made these timely decisions. This is an unpleasant and bad thing, in fact, the rise in prices, but I hope that, in general, by maintaining macroeconomic indicators, we will cope with this too,” Putin said.
He added that the government and the Russian central bank were tasked with delivering a “soft landing” of the economy, which he insisted was performing well overall and could achieve 3.9-4% growth this year.
The International Monetary Fund predicts Russia will notch 3.6% growth this year, before a deceleration to 1.3% growth in 2025.
The “sharp slowdown,” the IMF said, is envisaged “as private consumption and investment slow amid reduced tightness in the labor market and slower wage growth.”
On Thursday, Putin predicted that Russia’s economic growth should be 2-2.5% next year.