© Reuters. Russian President Vladimir Putin attends his annual end-of-year press convention and the Direct Line query and reply session, at Gostiny Dvor Exhibition Centre in Moscow, Russia December 14, 2023. Sputnik/Gavriil Grigorov/Pool through REUTERS
MOSCOW (Reuters) – Annual inflation could strategy 8% in Russia this yr, President Vladimir Putin stated on Thursday, a day earlier than the central financial institution is extensively anticipated to hike rates of interest once more to rein in hovering costs.
Most analysts polled by Reuters count on the Financial institution of Russia to boost its key price by 100 foundation factors to 16% on Dec. 15, with inflationary stress exacerbated by labour shortages and lending development along with hovering authorities spending and a weak rouble.
Putin has routinely praised the resilience of Russia’s financial system towards Western sanctions, however tends to skirt round points such because the weak point of the forex, stubbornly excessive inflation and the impression of excessive rates of interest on households’ buying energy, a very delicate subject because the nation gears up for a presidential election in March.
“The most important indicator is economic growth,” Putin stated in a year-end press convention. “GDP growth by the end of the year is expected at 3.5% – this is a good indicator, it means we have recovered from last year’s fall … and we have made a relatively serious step forward.”
Russia’s gross home product (GDP) contracted 2.1% in 2022 as sanctions over Russia’s invasion of Ukraine pounded the financial system.
A part of that restoration has been constructed on Russia’s success in evading a Western oil value cap, though Putin faces quite a few financial challenges as he runs for re-election.
“Unfortunately, inflation has increased,” Putin stated. “By the end of the year it is expected at 7.5%, maybe a little more at 8%, but the central bank and government are taking necessary measures.”
The central financial institution targets inflation at 4%. Putin stated it was assumed {that a} return to focus on indicators could be potential.
One lady’s query through video hyperlink about hovering costs for eggs elicited an apology from Putin, although he blamed the federal government.
“Demand has increased but production has not,” Putin stated. “Secondly, we didn’t open up imports on the required quantity in good time.
“I am sorry, so I apologise for this, but this is a failure of the government’s work.”
The federal government this week stated it might exempt 1.2 billion eggs from import obligation within the first half of subsequent yr to try to rein in costs which have risen greater than 40% this yr.
