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Russian President Vladimir Putin acknowledged inflation as a critical concern for Russia during his annual “Direct Line” Q&A session on Thursday. He described the situation as an “alarming signal” and noted that the economy is experiencing “overheating.”
The consumer price index in Russia reached 8.9% in November year-on-year, an increase from 8.5% in October. The rise was primarily attributed to escalating food prices, particularly in the dairy sector. The weakening ruble, worsened by recent U.S. sanctions, has further fuelled inflation by increasing import costs.
Putin mentioned that he had discussed the issue with Central Bank Chairperson Elvira Nabiullina, who informed him that inflation was approaching 9.3%. He emphasised that despite this, real wages have grown by 9%, and the population’s disposable income has also increased.
The Russian central bank is expected to raise its key interest rate to 23%, the highest in a decade, to combat persistent inflation. Putin attributed some price increases to international sanctions, but he also suggested that the central bank could have employed alternative methods to control inflation beyond adjusting 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,” Putin stated.
The Russian leader expressed hope that by maintaining macroeconomic stability, the country would overcome these challenges. He mentioned that the government and central bank are focused on achieving a “soft landing” for the economy. Putin projected economic growth between 3.9% and 4% for the current year, with a forecast of 2-2.5% growth for the following year.
The International Monetary Fund predicts a 3.6% growth for Russia this year, followed by a deceleration to 1.3% in 2025, citing reduced labour market tightness and slower wage growth as factors.