Inflation Feeds on Food
Rosstat, the government statistical service, reported yesterday that consumer prices rose 6.6 percent in the first seven months of this year. Last year at the same time, inflation had risen to 6.9 percent. In July, the inflation rose 0.9 percent, more slowly than June's 1 percent, and not due to rising produce prices, but because of rising prices for grain and eggs. Experts say food prices may stay in place for the rest of the year, but it is already too late to save the government's 8-percent inflation target.
The price of produce drove inflation in May and June. In July, that trend reversed itself. The price of cabbage dropped 14 percent in July, onion dropped 8.9 percent and garlic 3.6 percent. Thus, the price of produce increased 12.2 percent in June, and only 1.9 percent in July. Prices vary considerably in various regions, however, because of logistic considerations. Thus, in Tula and Ivanovo Regions, produce increased in price by 3.5 percent, leading the nation. The inflation rate in July would have been better if it were not for the rising price of grain on both domestic and international markets. The price of wheat flour in Russia rose 11.1 percent in July, according to Rosstat, and bread, baked goods, cereals, peas and beans rose in price 5.3-8 percent. Eggs also cost 8 percent more in July due to rising feed costs.
In August and September, domestically grown produce and grain will appear on the market and consumer prices may not rise, but even fall. The grain harvest in the Volga region, Urals and Western Siberia are good this year. But increased federal budget expenditures will increase inflationary pressure, so that inflation is not likely to fall below last year's level, and the government's plan seems doomed to fail once again.
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All the Article in Russian as of Aug. 07, 2007
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