Buyers and consumers: inflation in the Russian Federation should decrease to 5% by the end of the year%

Inflation in Russia accelerated to 6.4% in annual terms in January, largely due to the reconfiguration of the tax system and the increase in VAT. This was stated by Vladimir Putin on February 3 at a meeting on economic issues. However, by the end of 2026, it should decrease to 5%, the president is sure. According to him, it was precisely to reduce inflation that GDP growth was "artificially" slowed down, which in 2025 amounted to 1%. Thus, an increase in VAT will only have a short-term effect on prices. Experts believe that this will be most noticeable in the consumer sector. Whether Russians should wait for an increase in salaries and an early reduction in the key rate is in the Izvestia article.

The rate of inflation in Russia

On February 3, Vladimir Putin convened this year's first meeting on economic issues in person. Virtually the entire leadership of the bloc has arrived in the Kremlin: relevant ministers and deputy prime ministers, as well as the head of the Central Bank. The agenda included the results of the work of the domestic economy over the past year, as well as forecasts for the future, especially in light of challenges in the domestic and international markets.

One of the main results of 2025: gross domestic product (GDP) increased by 1%. This is lower than the previous dynamics, because in 2023 and 2024, the country's economy grew by more than 4%. But there are reasons for this, Vladimir Putin explained.

— This slowdown was not just expected, it could even be said to have been man—made: it is related to targeted actions to reduce inflation. If in 2024 the price increase amounted to 9.5%, then by the end of last year this figure was reduced to 5.6%," the president said.

At the beginning of the year, inflation accelerated slightly: as of January 26, it was 6.4% in annual terms. The Head of State called this fact expected, including due to the reconfiguration of the tax system, in particular, the increase in VAT to 22%. Starting this year, the thresholds for applying the simplified taxation system (STS) have also decreased. Now, only those whose incomes for 2025 did not exceed 20 million rubles are exempt from paying tax under the USN. The threshold will continue to decrease — in 2027 it will amount to 15 million, and then 10 million.

— According to the estimates of both the government and the Central Bank, that is, dear colleagues, according to your estimates, the impact of these changes on prices will be short—term, - said Vladimir Putin.

The President stressed that a predictable price situation is important for Russians, businesses, and the state.

When the situation stabilizes

The economy has adapted better to external conditions in 2025: Inflation has been declining, consumer demand has stabilized, and activity in a number of non-resource industries is growing, experts say. However, challenges remain related to structural changes and the need to increase investment activity, noted Alexander Shkarupa, founder of Dynamics.

High interest rates last year also seriously restrained economic activity, while the service sector, retail trade and certain segments of the manufacturing industry felt relatively stable, added Natalia Milchakova, a leading analyst at Freedom Finance Global. This year, we can expect a resumption of the key rate reduction cycle, probably starting in the spring. This creates prerequisites for an improvement in the economic situation: by the end of the whole year, GDP growth is expected to be in the range of 1-1.5%, the expert believes.

A moderate slowdown in GDP growth as an element of anti-inflationary policy is consistent with international practice, explained Alexander Shkarupa. An increase in VAT, he said, usually has a short-term effect on prices, after which the market adapts.

— The most noticeable increase in cost may be in sectors with high elasticity of demand and low competition, for example, in certain categories of consumer goods (food, consumer goods). It is expected that the main effect of the VAT increase will gradually be offset in the coming quarters as manufacturers and retailers adapt, the expert believes.

Vladimir Putin recalled that similar dynamics were observed in the Russian economy last year, so there is every reason to believe that this will be the case now — inflation is likely to drop back to about 5% by the end of the year. At the same time, it is important to see the whole picture, that is, the authorities need to control not only price dynamics, but also all macroeconomic indicators. The core block will first have to restore the growth rate of the domestic economy and reduce inflation. The results should be visible this year, the head of state said.

Improving working conditions and raising salaries

The President instructed to pay special attention to improving the employment structure in the economy. In the context of a shortage of personnel in certain sectors and industries, the priority remains to increase labor productivity. Automated systems and industrial robots, digital platforms and artificial intelligence solutions are to be implemented here. It is important to create modern and well-paid jobs in sectors with high productivity.

In recent years, a positive trend has been observed in the sectors related to technology, manufacturing and infrastructure projects, confirmed Alexander Shkarupa.

— The situation looks quite good with job creation — the employment rate in Russia will remain really high. In recent years, the construction of factories, industrial facilities and the implementation of major infrastructure projects have resumed. There has been a significant increase in demand for platform employment — marketplaces, the Internet economy and related work formats," Natalia Milchakova believes.

All other things being equal, the increase in salaries has not affected everyone. According to the Sbera survey, in 2025, incomes increased for only 55% of respondents. On the contrary, 34% of salaries decreased, while the remaining 11% remained at the same level. In addition, wage increases are not observed in all professions, but mainly in those areas where there is an acute shortage of personnel. These include, for example, construction, logistics, and the service sector.