Russian President Vladimir Putin participates in his annual televised telephone call with the country's citizens titled “Direct Line with Vladimir Putin,” which will be held at the Moscow Studio of the World Trade Center in Moscow, June 30, 2021.
Sergei Savostyanov | Af | 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 problems here, namely inflation, some overheating of the economy, and the government and the central bank already have the task of slowing down,” Putin said on Thursday during his annual “Direct Line” question-and-answer session with Russian citizens. , in comments translated by Reuters.
Russia's consumer price index reached 8.9% year-on-year in November, up from 8.5% in October. This increase was mainly due to rising food prices, with the increase in prices of milk and dairy products this year.
A weaker ruble — in the wake of new U.S. sanctions in November — also fueled inflation by raising the cost of imports to Russia. Meanwhile, massive increases in military spending created shortages of labor, supplies, and production elsewhere, driving up prices and prompting workers to demand higher wages.
“Of course, inflation is such a worrying signal,” Putin noted in further comments Interfax reported and translated by Google.
“Just yesterday, when I was preparing for today's event, I talked to the president of the Central Bank, Elvira (Nabiullina), who told me that it is already somewhere around 9.3%. But wages increased in real terms by 9%, I want to emphasize this – in real terms minus inflation – and the disposable income of the population also increased,” he said.
Russia's central bank is widely expected to raise its benchmark interest rate by 200 basis points to 23% – the highest level in a decadecompared to the 20% recorded during the 2022 invasion of Ukraine – on Friday, amid persistently high inflation in a war-centric economy.
Putin blamed international sanctions for the price hikes, but also appeared to criticize the central bank, saying experts had suggested that tools other than interest rates could have been used to curb inflation.
“Of course, external restrictions, sanctions, etc. also have an impact to some extent. They are not crucial, but they are reflected in one way or another (increase in prices) because they make logistics more difficult,” said the head of state, – according to comments from the Tass news agency and translated by Google. “But there are also subjective (factors) and there are our shortcomings.”
“We should have made these decisions in time. “It's actually a sad and bad thing, the price increase, but I hope that overall, maintaining macroeconomic indicators, we will also be able to cope with it,” Putin said.
He added that the task of the government and the Russian central bank is to ensure a “soft landing” of the economy, which, in his opinion, is generally doing well and could achieve growth of 3.9-4% this year.
The International Monetary Fund predicts that Russia will grow at 3.6% this year before slowing to 1.3% in 2025.
“A sharp slowdown,” the IMF said, is expected “as private consumption and investment slow in the face of reduced labor market tightness and slower wage growth.”
On Thursday, Putin predicted that Russia's economic growth should amount to 2-2.5% next year.