Vice Premier Alexei Kudrin, on the screen, said the index of consumer prices gained 1.3 percent in the first three weeks of October, and the basic inflation was appallingly high.
Photo: Dmitry Dukhanin
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Kudrin Recognizes Monetary Factor in Inflation
Vice Premier Alexei Kudrin has unveiled new data on the fall surge in inflation. The index of consumer prices gained 1.3 percent in the first three weeks of October, while the basic inflation was appallingly high. But the government won’t change its economic policy. The capital inflow resumed in October, as investors still believe in the course of the government all faults notwithstanding.
Vice Premier, Finance Minister Alexei Kudrin spoke October 26 about the inflation surge in Russia. Despite all previous explanations of the government, he recognized the determinant role of monetary factors coupled with the increase in government’s costs.
The interim data on behavior of consumer price index that Kudrin announced past Friday didn’t match the recent optimism of Economic Development Minister Elvira Nabiullina, who spoke about the local nature of September inflation not long ago, specifying that consumer price index grew 0.8 percent that month. But the index soared 1.3 percent October 1 through 22, Kudrin said, adding it climbed 8.9 percent from the start of this year.
According to Kudrin, the growth in basic inflation (the price index less seasonal prices, the prices controlled by the government) was 1.5 percent to 2 percent in October. “It is the highest indicator that shows the true situation on the market,” Kudrin explained, pointing out that “we have stepped back to the time of two years ago, if it doesn’t happen that the inflation will be even higher.”
So, Russia is back to two-digital inflation, it is clear already. Of interest is that Kudrin directly recognized that not the growth in food prices but rather the monetary factors were the key engine of inflation. The economic policy of the government and the Central Bank of Russia collided with the surge in prices on agrarian market, which didn’t allow to edge the price shock. In inflation growth, Kudrin said, the monetary factors fueled consumer price index by 3.4 percent from the start of this year, while EU had just 0.2 percent.
www.kommersant.com
All the Article in Russian as of Oct. 29, 2007
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