“This is much better than in many other countries”: Putin said that inflation in Russia exceeded 12%

Inflation in Russia in 2022 was about 12%, Russian President Vladimir Putin said.

“The predicted collapse [of the economy] did not take place. Yes, we have a reduction. They promised somewhere, well, they didn’t promise, but someone hoped that we would have a decrease in GDP by 20% and more than 20 - by 25%. There is a decrease, but not 20%, but 2.5%. Inflation will be a little more than 12% this year, and this is much better than in many other countries, including the G20 countries,” Putin said.

According to him, in the first quarter of 2023, inflation in annual terms will slow down to 4-5%.

In April, that annual inflation in the next 12 months - from April to April next year - will be in the range of 10-12%, said Central Bank Chairman Elvira Nabiullina. At the end of October, the Ministry of Economic Development called the forecast for inflation in the Russian Federation for 2022 at 12.4% relevant.

According to the Ministry of Economic Development, in 2022, GDP fell by 2.9%. Based on the forecast, minus 0.8% is expected in 2023 and growth of 2.6% in 2024 and 2025.

According to Rosstat , in 2021 inflation was 8.39%, which was the highest since 2015 (12.9%). Russia's GDP grew by 4.7% in 2021, Rosstat reported.

Earlier, the Financial Times wrote that a month before Russia launched a full-scale invasion of Ukraine, the head of the Central Bank, Elvira Nabiullina, and the head of Sberbank, German Gref, tried to warn Putin about the possible consequences of Western sanctions.

According to the newspaper, Gref gave a 39-page presentation to Putin. He talked about what catastrophic consequences await Russia if tensions around Ukraine escalate further. Nabiullina helped prepare the speech.

“Hard sanctions” will cause panic in the financial markets and potentially set the Russian economy back decades. GDP could fall by 30% in dollar terms in two years. Inflation will force the Central Bank to raise the interest rate to 35%, which will lead to a one-fifth reduction in real income, ”the presentation said, according to sources.

The report also reported that the quality of life of Russians will lag even behind developing countries, due to import restrictions in the country there will be a shortage of medicines and food, the newspaper wrote.

After the start of the Russian invasion of Ukraine and the imposition of Western sanctions on February 28, the Bank of Russia raised the key rate from 9.5% immediately to 20%. On April 8, the Central Bank began a gradual decrease in the indicator. As a result, only at the end of October, the Central Bank kept the key rate at 7.5% per annum.