Inflation in Russia makes it nearly impossible for businesses in the country to plan, Vladimir Putin said.
Russian inflation accelerated 5.15% year-per-year in August, well-above the 4% target.
Still, Putin brushed off longer-term concerns for the Russian economy, adding that its problems were not “insurmountable.”
Russian president Vladimir Putin acknowledged in a a speech this week that Russia’s inflation problem is bad enough that it has become “practically impossible” for businesses to make any plans in the nation.
The president spoke at Russia’s Eastern Economic Forum on Tuesday, touching on the economic problems that the nation was currently facing. Russian inflation accelerated 5.15% year-over-year in August, well-above the central bank’s 4% inflation target. Prices that high make the economic environment extremely uncertain for businesses in the nation, Putin said, per Reuters.
That’s a rare admission from Putin of Russia’s current economic woes. Over the last year, Putin has repeatedly emphasized the resilience of Russia’s economy and put up a show of defiance, despite trade restrictions and a soaring military budget biting into Moscow’s finances.
Russia’s economy is now under pressure to lift interest rates to lower inflation, but keep rates low enough to stimulate the economy and bolster its ruble, which recently slumped to a 16-month-low against the dollar. Analysts are largely expecting the central bank to raise rates again later this week, according a Reuters poll, though the bank already issued an emergency 350 basis-point rate hike in August, which lifted interest rates to 12%.
“Yes, it reduces lending opportunities and slightly restrains the economy … but it is a significant factor for inflation risks,” Putin said of Russia’s monetary tightening efforts. “If we miss a situation that will lead to uncontrollable inflation growth, in the long run it will be even worse for the economy,” he later added.
Still, Putin brushed off longer-term concerns. Despite the current inflation problem and the plunging value of the ruble, the nation isn’t facing anything that isn’t “absolutely insurmountable,” he said.
Experts and observers say that Russia’s economy has been significantly hobbled over the past year by western sanctions and the costly invasion of Ukraine. The nation’s oil and gas revenue has plunged since the west imposed sanctions on key energy commodities, and under-the-radar economic indicators suggest that Russia’s economy has broadly deteriorated since the start of the war.