Inflation’s Hit the Month’s Allotment
The report released by the Central Bank yesterday on inflation May 13-19 does not indicate that inflation is slowing. Since the beginning of the month, the consumer price index has risen 0.8 percent, more than it rose in all of May last year. In the week in question, inflation rose 0.3 percent. At this rate, with inflation having reached 7.2 percent already (compared to 4.2 percent at this time last year), it will reach its planned level for the year in August or September and reach 19 percent by the end of the year. That is unlikely to happen, however.
May, according to Rosstat statistics, is a low-inflation month. The Ministry of Economic Development predicted 1.1-percent growth in the consumer price index for the month. So far, it looks as though it will reach 1.3-1.4 percent. It has not exceeded 0.8 percent since 2001. When the consumer price index reaches the area of 20 percent annually, it begins to have a negative impact on the economy, economists warn.
It can be noted that the government has fallen silent about ending inflation. The Central Bank continued its anti-inflation rhetoric somewhat longer, with statements coming almost weekly, but, as inflation continued and the influx of capital picked up, it also dropped the subject. Nor do bankers spend the amount of time they once did speculating on what anti-inflation measures the government or Central Bank will try next will try next. There are few measures left to try. Even price controls proved ineffective. Nothing else could produce results before the end of the year. Inaction is a risky option as well, however. Only more radical measures will be needed later.
www.kommersant.com
All the Article in Russian as of May 22, 2008
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