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Russian President Vladimir Putin said on Monday that imposing sanctions on Russia had rebounded on the West.
Western countries have imposed unparalleled sanctions on Russia's corporate and financial system since it sent troops into Ukraine nearly two months ago.
The “strategy of the economic blitz has failed,” Mr Putin said.
“[The West] expected to quickly upset the financial-economic situation, provoke panic in the markets, the collapse of the banking system and shortages in stores.”
The Russian leader's televised remarks were made during a video call with senior economic officials. He claimed the rouble had strengthened and Russia had recorded a historic high trade surplus of $58 billion in the first quarter of the year.
By contrast, he said western sanctions had backfired against the US and its European allies, speeding up inflation and leading to a drop in living standards.
Mr Putin admitted to a sharp rise in consumer prices in Russia, and directed the government to index wages and other payments to alleviate the impact of inflation on people’s incomes.
“In the past month and a half alone, consumer prices in Russia have grown noticeably, by 9.4 per cent, and yearly figures number the inflation at 17.5 per cent,” he said.
“I call for attention from the government and central bank colleagues. We are all very well aware of it. Those are very high figures. People feel them on their family budgets. They can feel the prices growing. We must support our citizens, help them deal with the wave of inflation.”
The World Bank expects Russia's economy to contract by 11 per cent this year.
Missiles hit Lviv
Mr Putin's remarks followed a series of “powerful” Russian strikes on military infrastructure in Lviv on Monday which left several people dead and started fires in the western Ukraine city that to date has been spared fierce fighting.
A resident told AFP they could see thick plumes of grey smoke rising above residential buildings and air raid sirens sounded throughout the city during and after the strikes.
Lviv Mayor Andriy Sadovyi said seven people were killed and 12 were wounded.
Earlier, regional governor Maksym Kozytskyy said four Russian missiles had hit Ukrainian military infrastructure and that a car tyre centre was damaged.
He said the wounded included a child. Emergency teams were battling the fires.
“Fires were set off as a result of the strikes. They are still being put out. The facilities were severely damaged,” Mr Kozytsky said.
Lviv resident Andrei, 21, said he was sleeping when the sirens began wailing at around 8am local time.
“I slept through the first three strikes, but then when the last one hit, it was like my windows were about to break, and the furniture moved,” he told AFP.
Lviv, near Ukraine's border with Poland, so far been spared being embroiled in the worst of the fighting caused by Russia's invasion of its pro-western neighbour.
The city instead has become of refuge for people displaced from the war-scarred east and at the start of the fighting hosted several western embassies transferred from Kyiv.
Russian attacks intensify
The attacks on Monday came as Russia intensified strikes in and around the capital and farther east, taking aim at facilities that produce military hardware in attacks over several days.
Moscow vowed to increase pressure on the capital in response to what Russian military officials claimed were Ukrainian attacks on Russian soil and the sinking of the Moskva warship.
“Five powerful missile strikes at once on the civilian infrastructure of the old European city of Lviv,” Ukrainian presidential aide Mykhaylo Podolyak wrote on Twitter.
“The Russians continue barbarically attacking Ukrainian cities from the air, cynically declaring to the whole world their 'right' to kill Ukrainians,” he said.
Sham referendum fears
Human rights commissioner Lyudmila Denisova said Russian forces were distributing propaganda material telling people in occupied Kherson that Moscow was acting for their benefit.
She said leaflets handed out “blame the Ukrainians themselves and their chosen government” for the aggression against their country, echoing the Kremlin’s messaging about the invasion.
In 2014, Russia claimed control of the Crimean peninsula from Ukraine after a referendum showed public support for an annexation.
It was widely criticised as a sham by western countries, who said it was a breach of Ukraine’s constitution and that voters hardly had a free choice when Russian troops were on their soil.
British prisoners of war
The men, identified as pro-Ukrainian fighters Shaun Pinner and Aiden Aslin, addressed the camera to ask British authorities to arrange a swap for Kremlin ally Viktor Medvedchuk, who is detained by Ukraine.
It was not clear from the footage how freely the two men were speaking, and the broadcast did not say where or by whom they were being held.
Mr Pinner’s family issued a statement saying the former British Army soldier was not a volunteer or mercenary but was serving officially with the Ukrainian marines.
“Shaun enjoyed the Ukrainian way of life and considered Ukraine as his adopted country,” it said. The family said Mr Pinner moved to Ukraine in 2018 and met his wife there.
The family said they were working with the Foreign Office and the relatives of Mr Aslin to ensure that their rights under the Geneva Conventions were respected.
Mr Aslin’s mother told the Daily Telegraph that she recognised her son in an earlier appearance on Russian television and called on Moscow’s forces to treat him humanely.
In the latest footage on Russia 24 television, a state TV journalist showed the two prisoners a video published by Mr Medvedchuk’s wife, Oksana Marchenko, in which she demanded her husband be released.
The prisoners, who spoke in English with British accents, asked Mr Johnson to arrange for them to be exchanged for the Ukrainian oligarch.
“I’d really appreciate your help in this matter,” the man identifying himself as Mr Pinner said. He claimed to have been treated well by his captors.
The other prisoner said Mr Johnson should “help pressure [Volodymyr] Zelenskyy to do the right thing”, referring to the Ukrainian president.