By Katya Golubkova

MOSCOW (Reuters). Russian President Vladimir Putin demanded Wednesday an 8.6% increase in public pensions for this year. This is slightly higher than the inflation rate. It will also allow state spending to rise from last year’s lows, as consumers price inflation hovers around six year highs.

Putin made one-time social payments to the public and increased salaries in the public sector, which were ordered ahead of last year’s parliamentary elections. Analysts believe this may fuel inflation.

According to preliminary data, Russia saw an increase in inflation to 8.4% for the year. This was nearly double its level of 2016 and almost twice that of the target of 4%. It forced the regulator to tighten their monetary policies.

Rising consumer prices impact living standards. Putin, however, has promised for many years to improve real disposable incomes. He called for preemptive measures last year to prevent inflation spiralling.

His Wednesday statement stated that Russia’s pensions must be raised by 8.6%. It is slightly higher than last year’s preliminary inflation reading.

Putin stated that “previously taken decisions won’t cover people’s expenses due to accelerated inflation last Year,” at a meeting of the government. “So… I propose… to raise pensions by slightly less than inflation.”

According to the central bank, inflation will slow down to between 4% and 4.5% before the year ends. Over the past year, it raised its benchmark interest rates to 8.5% (from 4.25%) and indicated more rate increases could be made in future months.