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International sanctions are affecting growing prices in Russia, but there are also shortcomings by Russian authorities, Russian President Vladimir Putin said during his annual press conference and a call-in program on Dec. 19, state news agency TASS reported.
Russian officials have largely dismissed the importance of Western sanctions imposed over the full-scale invasion of Ukraine, boasting about a strong and resilient economy.
While independent observers mostly agreed that the sanctions fell short of the desired effect, there are mounting warning signs regarding Russia's economy ahead of 2025.
"The sanctions are having an effect, but they are not of key importance," Putin said when talking about the surging inflation and prices in Russia. The country's annual inflation rate rose 9.2-9.3% while the ruble oscillates around 100 to the U.S. dollar.
Russia's central bank sought to curb inflation by instituting the highest interest rates – 21% – since the early 2000s.
According to Putin, inflation is driven by the supply not keeping up with the demand and the rising prices of some products globally. Many experts also connected the development to increased defense spending as Russia invests record sums in its full-scale war against Ukraine.
"Some experts believe that the central bank could have used tools unrelated to raising the key interest rate more effectively and earlier," Putin said.
"The central bank began doing this in the summer, but these experts believe this could and should have been done earlier."
The combined effect of sanctions and inflation is beginning to threaten the Russian economy in various sectors, including automotive, aviation, and retail. This development comes amid a growing push by U.S. President-elect Donald Trump to launch negotiations in Ukraine as soon as possible, though Moscow has shown little interest in peace talks.
Oleg Sukhov
(Updated: )
