Russian President Vladimir Putin acknowledged on Thursday that inflation is a significant problem in the country and its economy is overheating. The consumer price index rose to 8.9% in November, driven by rising food prices and a weaker ruble following US sanctions.
Putin stated that the government and central bank aim to achieve a “soft landing” of the economy, which he claims is performing well overall despite inflation concerns. He attributed external factors such as international sanctions for price rises but also criticized the central bank, suggesting other tools could have been used to tame inflation.
The Russian central bank is expected to hike its benchmark interest rate by 200 basis points to 23%, the highest level in a decade. The International Monetary Fund predicts Russia will experience 3.6% growth this year, followed by a deceleration to 1.3% growth in 2025. Putin predicted that Russia’s economic growth should be 2-2.5% next year.
The government and central bank face the challenge of balancing economic growth with inflation control, which has become a pressing issue in Russia. The recent increase in military spending has caused labor shortages and driven up prices, further exacerbating the situation. With Putin’s admission that inflation is an “alarming signal,” it remains to be seen how the government will address this critical issue.
Source: https://www.cnbc.com/2024/12/19/putin-admits-russian-inflation-is-alarming-and-economy-overheating.html