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  • News Desk
  • Oct 25th, 2005
  • Comments Off on Putin asks Russian cabinet to rein in inflation
Russia's President Vladimir Putin asked his government on Monday to draft a package of measures to rein in inflation which the government targets at 10-11 percent this year. "The government should think about a system of measures in this direction," Putin told a televised government meeting without elaborating.

Prices rose by 8.6 percent this year to September. The Economy Ministry expects a 0.3 percent rise in October while a Reuters survey has shown analysts expect annual inflation to reach 11.8 percent.

Russia's Finance Minister Alexei Kudrin told the meeting he expected inflation to drop to 4.5-5 percent in 2008 but admitted this task would be hard as prices for utilities and food are surging.

"Lowering inflation to 4.5-5 percent is the most difficult task, but absolutely achievable," Kudrin was quoted by Russian news agencies as saying.

Higher budget spending has helped fuel domestic demand and inflation.

"At the moment the budget is the main reason behind rising inflation," said Evgeny Gavrilenkov, chief economist at Troika Dialog investment bank.

Some analysts said it would be possible to control inflation with administrative measures in the short term.

"The question of control over inflation is the question of a deal with companies to administer prices. It should be possible, in principle," Natalya Orlova, chief economist at Alfa Bank.

The International Monetary Fund criticised Russia in its report released last week ans said economic reforms were at a standstill.

Copyright Reuters, 2005


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