The growth of Russia’s economy has been the success story of Vladimir Putin’s presidency. Since 2000, Russia’s GDP has increased by an average of 7 percent per year. Of late, however, the optimism about Russia’s economic future has been diminished by rising inflation, which has skyrocketed to over 11 percent from 9 percent a year ago. The price of bread, a staple of the Russian diet, doubled this year. From August to September, the price of milk rose by 9.2 percent and vegetable oil by 15 percent. In an attempt to control inflation, the Kremlin forced the largest food sellers to freeze the prices of bread, milk, sugar, cheese, and vegetable oil. The moratorium will continue through the Duma elections on December 2 and may be extended past the presidential elections in March 2008. Yet these price controls have not slowed inflation, which jumped another 0.9 percent in the first two weeks of November.

What is behind this sudden increase in inflation? What effect will it have on the prospects for Russia’s economic future? Can the Kremlin effectively curtail inflation before it does more damage, both economically and politically? On December 18, 2007, AEI will host a panel with Andrei Illarionov, former economic advisor to President Putin; AEI economist Desmond Lachman; and Ann Wrobleski, vice president for public affairs at International Paper, to discuss these and other questions.