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Russia Not to Contain Inflation, World Bank Says
Inflation in Russia will hit the government’s outlook, Interfax quoted World Bank’s forecast. 2005 inflation will reach at least 10 percent, WB chief economist John Litvak said.
According to Litvak, the Central Bank of Russia (CBR) doesn’t have many instruments to control inflation, which makes Stabilization Fund particularly vital as an instrument of sterilization. This year’s inflation will reach at least 10 percent, it may climb higher depending on the capital inflow, Litvak specified.
Russia’s inflation is tied to the capital inflow. Every time when the CBR endeavors to toughen the monetary policy and allow certain appreciation of ruble, investors respond by the capital flow, which lessens the effect of above moves on inflation. With the capital inflow in line with the fourth quarter of 2004, Russia’s inflation may exceed the expected level, Litvak pointed out.
Under the 10th report of the World Bank promulgated today, Russia had 11.7 percent consumer inflation in 2004, 17 percent above the targeted 10 percent.
The problem of inflation has survived in 2005. Monthly inflation was extremely high in January (2.6 percent). With regard to the seasonal factor and price adjustability, the basic inflation stood at 1.6 percent. If such inflation rates survive, it will be above 9.5 percent by the end of 2005. The government’s outlook sets forth 8.5 percent.
www.kommersant.com
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Photo: Alexey Kudenko
