MOSCOW, October 26 (RIA Novosti commentator Peter Lavelle) -
President Vladimir Putin today conceded that the government's initial year end inflation targeted 8.5% was no longer viable. "Now it is clear that this objective will not be attained," he said. The government has increased it year-end inflation target to 10%-11%.
Earlier in the week, the president urged the government to cut the inflation rate in half in the next three years and design a package of anti-inflationary measures in the nearest future.
Russia recorded inflation of 8.6% in 9M05 and the Ministry of Economic Development and Trade is forecasting a 0.3% rise in October.
Finance Minister Alexei Kudrin said at a government meeting this week that he expected inflation to drop to 4%-4.5% in 2008, though he acknowledged this goal would be extremely difficult given surging utilities and food prices.
Kudrin has also said the government should restrict tariff increases by Gazprom, utility giant United Energy Systems, and Russian Railways as it exercises its bluntest instrument for keeping a lid on inflation - control over natural monopolies. All three enterprises have balked at such restrictions, claiming capital expenditures to improve infrastructure would be negatively impacted.
The new inflation target is reasonable, but conservative. The government's loosening of the budget purse strings in recent months has made its own job harder, as higher spending is clearly fueling inflationary pressures and the oil price has not made matters much easier, either.
