Putin admits high inflation is a ‘worrying signal’
Vladimir Putin recognized Thursday that galloping inflation in Russia, which accelerated in November to 8.9%, was a “worrying signal”, despite everything trying to boast of a “stable” situation.
“Inflation is a worrying signal,” admitted the Russian president in the first minutes of his major annual press conference, while the authorities are officially targeting a 4% price increase.
“What is unpleasant and bad is the rise in prices. But I hope that if the macroeconomic indicators are maintained, we can cope with it,” he added.
Inflation in Russia is notably fueled by the explosion in military spending for the assault in Ukraine, the effects of sanctions and rising wages, a direct consequence of labor shortages on the job market, companies being obliged to offer attractive remuneration to recruit.
War in Ukraine: Zelensky reveals images where Russian soldiers burn the faces of North Koreans who died in combat (VIDEO)
This rare admission from Vladimir Putin comes on the eve of a highly anticipated meeting of the Central Bank of Russia (BCR) which could raise its key rate, already at a record level in 20 years of 21%.
Analysts expect the key rate to rise by one or two percentage points on Friday.
This possibility has already provoked an outcry from major Russian bosses, some denouncing a “madness” which limits investments and, according to them, slows down the national economy.
“The situation of the economy as a whole in Russia is stable, despite external threats and attempts at influence,” however, Vladimir Putin tried to convince journalists in this television show watched by millions of Russians.
The Russian economy, after having resisted Western sanctions for the last three years, has been showing signs of running out of steam for several weeks, with stubborn inflation eroding purchasing power, but also a surge in interest rates which is handicapping businesses, the falling ruble and a gloomy outlook for 2025.
The Russian currency is at its lowest against the dollar and the euro since March 2022, with the greenback currently trading for more than 100 rubles.
Vladimir Putin said he expected an increase in GDP at the end of the year of “3.9%, perhaps 4%”, but the BCR anticipates a sharp deceleration next year, with growth expected in 2025 between 0.5 and 1.5%.
