Putin admits that Russian inflation is “alarming” and the economy is “overheating.”

Russian President Vladimir Putin said on Thursday that inflation was a problem for Russia and that the country’s economy was overheating.

“There are some problems here, namely inflation, some overheating of the economy, and the government and the Central Bank are already tasked with slowing down the pace,” Putin said Thursday in his annual “Direct Line” Q&A. Answer round with Russian citizens, in comments translated by Reuters.

Russia’s consumer price index reached 8.9% year-on-year in November, up from 8.5% in October. The increase was mainly due to rising food prices. As the cost of milk and dairy products skyrockets this year.

A weaker ruble – following new US sanctions in November – has also fueled inflation and pushed up the cost of imports to Russia. Meanwhile, a massive increase in military spending elsewhere has created labor, supply and production shortages, driving up prices and prompting workers to demand higher wages.

“Of course inflation is such an alarming signal,” Putin noted in further comments reported by Interfax and translated by Google.

“Just yesterday, when I was preparing for today’s event, I spoke to the head of the Central Bank, Elvira (Nabiullina), who told me that it was already at around 9.3%. But wages have increased by 9% in real terms, I said. “We want to emphasize this – in real terms minus inflation – and the population’s disposable income has also increased,” he said.

Russia’s central bank is widely expected to raise its key interest rate by 200 basis points to 23% – the highest level in a decadean increase from the 20% seen during the invasion of Ukraine in 2022 – on Friday, amid stubbornly high inflation in the war-torn economy.

Putin blamed international sanctions for price increases but also appeared to criticize the central bank, saying experts had suggested that other tools beyond interest rates could have been used to curb inflation.

“Of course, external restrictions, sanctions, etc. also have an impact to a certain extent. Although they are not of crucial importance, they are nevertheless reflected in one way or another (in the price increase) because they make logistics more difficult, “more expensive,” said the head of state. according to comments from the Tass news agency and translated by Google. “But there are also subjective (factors) and there are our shortcomings.”

“We should have made these timely decisions. This is indeed an unpleasant and bad thing, the rise in prices, but I hope that in general, by maintaining macroeconomic indicators, we will also be able to cope with it,” Putin said.

He added that the government and the Russian Central Bank are tasked with bringing about a “soft landing” of the economy, which he said is doing well overall and could achieve growth of 3.9% to 4% this year.

The International Monetary Fund forecasts Russia will post growth of 3.6% this year before slowing to 1.3% in 2025.

According to the IMF, the “sharp slowdown” is expected “as private consumption and investment slow in the face of lower labor market tightness and slower wage growth.”

On Thursday, Putin predicted that Russia’s economic growth would be 2% to 2.5% next year.