Inflation Gets Ready for the Holiday
Between April 15 and 21, inflation was 0.3 percent, Rosstat reports. Thus, consumer prices have risen 6 percent since the beginning of the year, or over 14 percent annually, and it is continuing to rise. The federal statistics service's data indicate that inflation is hitting the poor the hardest, with rising food and gas prices. On May 1, the moratorium on price increases for socially significant food products will end. That moratorium will not be extended, says Deputy Minister of Economic Development and Trade Andrey Klepach.
Prices are rising fastest for flour, bread, sunflower oil and wheat. Wheat has increased 20.3 percent in price since the beginning of the year. The cost of the minimal selection of food products (for physical survival) now costs 1993.50 per month. It rose in cost by 10.6 percent in the first three months of the year, which is more than twice as fast as the overall inflation rate. Gasoline has increased in price by 6.8 percent since the beginning of the year. In several regions, high-octane Ai-95 gasoline costs over $1 per liter, and it is expected to reach that price through Russia by the summer.
Soon, food price increases will not be controlled even formally. The government has apparently been convinced of the ineffectiveness of price controls, although they are legislatively still available to it. The government faces a tough situation. It has no more administrative means of controlling inflation, and it options in monetary policy are limited. Capital influx is expected to increase again, with ensuing higher money supply and inflationary expectations. That means that prices will be increased in an effort to stay ahead of expected inflation.
www.kommersant.com
All the Article in Russian as of Apr. 24, 2008
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