18 Jan 2023 16:33

Putin expects inflation to be around 5% in Q1 2023

ST. PETERSBURG. Jan 18 (Interfax) - Inflation could be 5% in the first quarter of 2023, Russian President Vladimir Putin said.

"A downward trend [in inflation is expected]. We think that there will be somewhere around 5% [inflation] in the first quarter and then there is even a downward trend," Putin said during a meeting with employees at the Obukhov plant, part of the Almaz-Antei aerospace defense concern.

Putin noted that inflation was less than 12% in 2022.

"In simple terms, there are their own entrapments. If inflation absolutely drops, then there could be some disruption in the economy. The Central Bank assumes that it will be somewhere in the region of 5%-7%," Putin added.

At the same time, Putin stressed that indexation of minimum monthly wages and other components that affect the level of citizens' real incomes should outpace inflation.

The president was asked whether it was possible legislatively to fix the indexation of wages at the level of official inflation.

He said the wellbeing of citizens was "one of the most burning" issues. Putin recalled that a lot had been done to resolve it when implementing his "May decrees."

"But unfortunately a lot still had to be raised to the level that was planned. But we will definitely continue to work in this direction," Putin said.

"In this regard, the government already has instructions to carry out indexation in the public sector in January," he said.

He said this problem should be tackled differently in the private sector. "It's a completely different story here. It's very dangerous to dictate wages administratively. This can lead to an imbalance in the finances of enterprises. Ultimately, if you follow this path, an enterprise may turn out to be unprofitable. It will just close. Workplaces will close," Putin said.

"Here, in a market economy, you need to act very carefully. This does not mean at all that you don't need to think about it. On the contrary, you do need to think about it, and think about it constantly," Putin said.

He said an increase in the minimum wage could help in this area, since other wage-related aspects, including in the private sector, depended on its level.

The minimum wage was raised twice last year.

"We will of course be monitoring the level of wages and the relationship between inflation processes, the rise in prices for goods and services and the level of real incomes. This year, I have asked the government to index the minimum wage more than the rate of inflation," Putin said.