A significant part of Vladimir Putin's speech at the St. Petersburg Economic Forum was devoted to criticism of the European Union, which, in the words of the Russian leader, "has completely lost its political sovereignty" and cannot cope with economic problems. Recognizing that such problems, including high inflation, exist in Russia, he noted that the Russian state was able to protect the population from falling living standards:
“According to experts, only direct, “countable” losses of the European Union from the sanctions fever over the coming year may exceed $400 billion. This is the price of decisions that are divorced from reality and taken contrary to common sense.
These costs are directly borne by the population and companies of the European Union. Inflation growth in some eurozone countries has already exceeded 20%. I talked about our inflation, but the countries of the eurozone do not conduct any special military operations, and inflation has risen in them - in some - up to 20%. The United States also has unacceptable inflation, the highest in 40 years.
Yes, of course, inflation in Russia is also still at double-digit levels. However, we have already indexed social payments and pensions, raised the minimum wage and the living wage, thus protecting the least well-to-do citizens. And, in turn, high interest rates made it possible to keep people's savings in the Russian banking system.
Of course, for business representatives it is clear: a high key rate presses the economy - understandable. For citizens, in most cases, this is a plus: they returned a significant amount of money to banks at a high interest rate.
This is the main difference from the countries of the European Union, where the growth of inflation directly leads to a decrease in the real incomes of the population and eats up their savings, and the current crisis is a burden primarily on low-income citizens.”
Let's start with the fact that of all the EU countries, inflation above 20% in May 2022 was noted only in one - in Estonia. In the eurozone countries as a whole, inflation in May was at the highest level since the introduction of the single European currency, but this is only 8.1%. In May, the European Commission announced that the expected inflation rate for the year is 6.1%. In Russia, in early June, experts surveyed by the Central Bank predicted inflation of 17% by the end of 2022, which is close to the S&P April estimate of 17.8%.
In the first quarter of 2022, according to Rosstat, the expenses of Russians exceeded their income, that is, their savings began to melt. In mid-May, the Russian Ministry of Economic Development announced that the real disposable income of the populationwill decrease by 6.8% in 2022. According to the forecast of the ministry, last year's level of income will be reached only by 2025.
The pensions of non-working Russians have been indexed by 8.6% since January 1, and by an additional 10% since June 1. Thus, in the first 5 months of the year, pensioners received 108.6% of last year's pension, in the remaining 7 months they will receive 119.5%, and in general, by the end of the year, payments will increase by 11.5%, which is significantly lower than the inflation forecast.
In addition, it is obvious that the less wealthy a citizen is, the greater part of his income he spends on food. And the rise in price of products in Russia exceeds the general level of inflation. So, according to Rosstat for May 2022, inflation in annual terms amounted to 17.02%, while food prices increased by more than 20% compared to May last year, and fruits and vegetables - by 26.35%. Thus, inflation in Russia hit precisely the low-income segments of the population.
