Russian inflation eases overall, food prices up

4th March 2011, Comments 0 comments

Inflation in Russia in February fell sharply to 0.8 percent from 2.4 percent in January, when prices rose sharply over the New Year holiday period, official figures showed Friday.

Compared with a year-earlier, prices were 9.5 percent higher, after 9.6 percent the previous month.

The Russian government has signalled it is worried about rising prices after last year's disastrous harvest due to a record heatwave squeezed supply of basic foodstuffs.

This week the central bank hiked interest rates for the first time since December 2008, partly to keep a lid on inflation, especially rising food and energy prices.

The figures showed that the cost of a basket of basic foodstuffs rose 7.6 percent in the first two months of the year.

Russian inflation, which reached levels that caused panic in the 1990s, had been on a steady decline in the last years until the heatwave, allowing the central bank to cut interest rates during the global economic crisis.

The government has admitted it will not be able to keep its inflation target of 6-7 percent this year after an 8.8 percent jump in rices in 2010 and officials are keeping a wary eye in case rising prices spark public discontent.

© 2011 AFP

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