Vladimir Putin says inflation in Russia is making it “practically impossible” for companies to plan

Reuters/Osley Marcelino

  • Vladimir Putin said inflation in Russia is making it almost impossible for companies in the country to plan.

  • Russia’s inflation rate accelerated to 5.15% year-on-year in August, well above the 4% target.

  • However, Putin brushed off long-term concerns about the Russian economy, adding that its problems were not “insoluble.”

Russian President Vladimir Putin admitted in a speech this week that Russia’s inflation problem is bad enough that it has become “practically impossible” for companies to make any plans in the country.

The president spoke at Russia’s Eastern Economic Forum on Tuesday, where he touched on the economic problems the country is currently facing. Russia’s inflation rate accelerated to 5.15% year-on-year in August, well above the central bank’s inflation target of 4%. Putin said that high prices make the economic environment very unstable for companies in the country. According to Reuters.

This is a rare acknowledgment by Putin of the current economic problems plaguing Russia. Over the past year, Putin has repeatedly emphasized Resilience of the Russian economy They have shown defiance, despite trade restrictions and a high military budget affecting Moscow’s finances.

The Russian economy is now under pressure to raise interest rates to reduce inflation, while keeping interest rates low enough to stimulate the economy and strengthen the ruble, which has recently strengthened. It fell to its lowest levels in 16 months against the dollar. Analysts largely expect the central bank to raise interest rates again later this week, according to a Reuters poll, although the bank has already issued a decision to raise interest rates. Raising interest rates by 350 basis points In August, raising interest rates to 12%.

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“Yes, it reduces lending opportunities and restricts the economy a little… but it is an important factor for inflation risks,” Putin said of Russia’s monetary policy tightening efforts. He later added: “If we miss a situation that will lead to uncontrollable inflation growth, it will be worse for the economy in the long run.”

However, Putin ignored long-term concerns. He said that despite the current inflation problem and the devaluation of the ruble, the nation is not facing anything that is “absolutely insurmountable.”

Experts and observers say the Russian economy has been severely hampered over the past year by Western sanctions and the costly invasion of Ukraine. Countries Oil and gas revenues declined Since the West imposed sanctions on major energy commodities, and Hidden economic indicators indicate that the Russian economy has deteriorated on a large scale Since the beginning of the war.

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