Russia to see higher inflation in 2010 and after: data

30th August 2010, Comments 0 comments

Russia will see higher-than-expected inflation in 2010, officials said Monday, citing revised statistics that foresee prices to grow by up to 8.0 percent in the face of the country worst ever drought.

The finance minister raised Russia's 2010 inflation forecast to between 7.0 and 7.5 percent on Monday.

"I think that inflation could rise to 7.0 percent, or even higher to 7.5 percent," Alexei Kudrin told Russian news agencies.

The ministry had previously forecast inflation of 6.0-7.0 percent in 2010.

"And next year, it will also be between 6.0 and 7.0 percent," Kudrin was quoted as saying.

Meanwhile, the economic development ministry said it expected inflation of between 7.0 and 8.0 percent this year, deputy minister Andrei Kelpach said Monday.

"In 2010, the forecast increased to 7-8 percent due to the drought. That said, we can most likely expect a 7.5-7.8 rise in consumer prices," Klepach was quoted by the Interfax news agency as saying.

Prices of basic foodstuffs like buckwheat and flour have soared in Russia over the past month as the effects of the drought hit supplies.

Inflation in Russia was 0.6 percent for the first three weeks in August, considerably higher than a year earlier, the state statistics office said.

Most alarmingly, the price of Russian staple buckwheat -- enjoyed by generations for breakfast or as an accompaniment to meat -- rose sharply by more than 8.0 percent.

The drought, caused by the hottest summer in Russia on record, has destroyed one quarter of the country's crops and prompted the government to slap a highly controversial ban on grain exports to protect domestic supplies.

© 2010 AFP

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