Russian inflation is a 'concerning indication' and the economy is 'overheating', Putin concedes.

• On Thursday, Russian President Vladimir Putin stated that inflation is a pressing issue in Russia and that the country's economy is experiencing excessive growth.
• In his annual "Direct Line" Q&A session with Russian citizens, Putin stated that inflation is a cause for concern.
• The government and the Russian central bank were assigned the responsibility of achieving a "soft landing" of the economy, which the speaker stated was performing well and could achieve 3.9-4% growth this year.

On Thursday, Russian President Vladimir Putin stated that inflation is a pressing issue in Russia and that the economy is becoming too heated.

Inflation, overheating of the economy, and the government and central bank's responsibility to slow down the tempo were mentioned by Putin during his annual "Direct Line" Q&A session with Russian citizens on Thursday, as translated by Reuters.

In November, Russia's consumer price index rose to 8.9% year-on-year, compared to 8.5% in October. The main driver of this increase was the surge in food prices, particularly the cost of milk and dairy products.

The weaker ruble resulting from new U.S. sanctions in November has contributed to inflation in Russia, increasing the cost of imports. Additionally, a significant increase in military spending has caused labor, supply, and production shortages, leading to higher prices and wage demands from workers.

Putin remarked that inflation is a concerning indicator, as reported by Interfax and translated by Google.

Yesterday, while preparing for today's event, I spoke with Elvira [Nabiullina], the chairperson of the Central Bank, who informed me that the inflation rate was around 9.3%. However, in real terms, wages have grown by 9%, and the disposable income of the population has also increased.

On Friday, Russia's central bank is predicted to increase its benchmark interest rate by 200 basis points to 23%, the highest level in a decade, from the 20% rate during the Ukraine invasion in 2022, due to persistent inflation in the war-torn economy.

Putin attributed price increases to international sanctions, but also criticized the central bank, suggesting that experts recommended alternative methods to control inflation, aside from interest rates.

"The head of state acknowledged that external restrictions, sanctions, and other factors have some impact on the rise in prices, although they are not the primary cause. However, subjective factors and our own shortcomings also play a role."

Putin stated that we should have made timely decisions, which is an unpleasant and bad thing, but he hopes that by maintaining macroeconomic indicators, we will cope with the rise in prices.

The government and the Russian central bank were assigned the responsibility of achieving a "soft landing" of the economy, which the speaker stated was performing well and could achieve 3.9-4% growth this year.

This year, the International Monetary Fund anticipates that Russia will experience 3.6% growth, followed by a slowdown to 1.3% growth in 2025.

The IMF predicts a "sharp slowdown" due to decreased private consumption and investment, as well as reduced labor market tightness and slower wage growth.

Next year, Putin predicted that Russia's economic growth should be between 2% and 2.5%.