Putin says inflation ‘worrying’ but Russian economy ‘stable’

Russian President Vladimir Putin on Thursday acknowledged concerns over high inflation, but insisted the economy was “stable” in the face of external threats.

Russia’s central bank is set to hike interest rates on Friday in its latest attempt to deal with the pace of price rises amid the military offensive on Ukraine.

“With the economy as a whole, the situation in Russia is stable, despite external threats,” Putin said at a televised end-of-year press conference.

However, he added: “Inflation is a worrying signal.”

“The thing that is unpleasant and bad is the rise in prices. But I hope that if macroeconomic indicators are maintained, we will be able to cope with it.”

Russia officially targets inflation of 4.0 percent, though prices have risen significantly faster since February 2022, when Moscow ordered troops into Ukraine.

The central bank has raised rates to a two-decade high of 21 percent in a bid to cool inflation.

It is set to raise them yet again at its final meeting of the year on Friday.

Russia has massively ramped up spending on the military offensive, while hundreds of thousands of men have been drafted into the army, hired by arms producers or fled the country.

That has triggered deep labour shortages, while the high borrowing costs have frustrated business leaders, including those at state-run businesses and close to Putin.

The Kremlin leader said Russia had grown faster than the eurozone over the last two years.