Russian Economic Development and Trade Minister Elvira Nabiullina
Photo: Dmitry Azarov
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Prime Minister Holds Meeting on Prices
Inflation in 2008 may remain at last year's high level. Kommersant has learned that the government is preparing to revise its inflation prognosis and develop an anti-inflation strategy. It will have to deal with declining liquidity in the banking system at the same time. These topics were the subject of a meeting held by Prime Minister Viktor Zubkov on Monday.
Sources say that Minister of Economic Development and Trade Elvira Nabiullina officially warned the government at that meeting that inflation for January may total 1.9-2 percent. That is higher than the predicted 1.8 percent and higher than last January's 1.7 percent. Nabiullina said that increased social spending this year will increase the already high inflationary risks.
The Economics Ministry also officially announced inflation data for last year at that meeting. (Rosstat, the state statistics service, had already released the information.) Consumer prices rose 11.9 percent in Russia in 2007. Non-food goods increased in price by 6.5 percent (compared to 6% in 2006). Paid services rose in price by 13.3 percent (13.9% in 2006) and food increased by 15.6 percent (8.7% in 2006). It was food prices that foiled the Economics Ministry's 8-percent inflation prognosis for last year.
Finance Minister Alexey Kudrin disagreed with the conclusions of the Economics Ministry and blamed inflation last year on monetary factors. He pointed out that the money mass (M2) rose 52 percent last year, while its forecast growth was 29 percent. Therefore, Kudrin also disagreed with the 24 anti-inflationary measures presented by the Economics Ministry at the meeting in a document that was almost an exact copy of the one it presented last November. Kudrin did not have measures of his own to suggest. He warned, however, that the liquidity problems that Russian banks experienced in the middle of last year may reoccur in the second half of this year.
The discussion of inflation will be continued at the session of the government on January 31. Zubkov instructed the Economics and Finance Ministries to work out the actual causes of inflation in the meantime.
www.kommersant.com
All the Article in Russian as of Jan. 23, 2008
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