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Inflation Production Continues
Russia’s Prime Minister Vladimir Putin repeated yesterday the need to “bring down inflation to one-digit figure in 2009.” The government’s forecasts set forth exactly this scenario. Both the budget draft and the monetary and credit guidelines of the CBR specify the maximum CPI of 8.5 percent.
Thanks to the monetary and credit policy and situation on markets of raw materials, Russia has “all prerequisites” to match Consumer Price Index (CPI) of 11.8 percent this year, Economic Development Minister Elvira Nabiullina announced yesterday.
The government backs up the CBR in its aspiration for fighting inflation as a matter of priority, said Vice Premier and Finance Minister Alexei Kudrin as if in response to the recent statement of CBR First Deputy Chairman Alexei Ulyukaev. Central Bank of Russia would like to have one priority, the stability of prices, Ulyukaev emphasized not long ago. At present, CBR is also responsible for the ruble stability.
Indeed, CBR needs political support as never before. Once it became clear that the hopes for the August deflation will hardly materialize – CPI grew 0.2 percent August 1-18 – the task of matching 11.8-percent consumer inflation seems even less attainable.
Another bad news was the rise in manufacturers’ prices. According to official statistics, Producer Price Index (PPI) grew 5.4 percent in July, manifesting the on-year surge of 33.7 percent, i.e. more than two fold above the annual pace of consumer prices (14.7 percent). The gap between these two benchmarks won’t last for ever, as produced goods are consumed sooner or later.
www.kommersant.com
All the Article in Russian as of Aug. 22, 2008
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