They say the Russian authorities have lost the battle to keep inflation within the planned range of 7.5%-8%. The data for the past few months proves this explicitly.
The Federal Statistics Service (Rosstat) has reported that inflation reached 1% in June, compared with 0.3% the year before, and 0.9% in July (0.7% in July 2006). Prices of basic consumer goods have grown by 6.6% since January.
Inflation grew in June mainly because prices of fruit and vegetables soared by 12.2%. Officials could not pinpoint the reason, putting the blame on the government, which failed to oust foreign traders from Russian retail markets, and on Russians, who refuse to deposit their savings and are instead spending them lavishly.
When the new harvest reached the market in July, the situation in the vegetables market stabilized, but prices of grain - and subsequently bread - went up. According to Rosstat, prices of wheat flour grew by 11% in July and of bread and bakery products by 5%-8% (between 15% and 50% in some regions).
Agriculture Minister Alexei Gordeyev said: "Bread is always in demand, and so it is logical that bread prices are growing alongside global grain prices."
However, growth was not confined to bread as prices of fodder grain went up, too, hitting livestock breeders. Grain makes up 70% of mixed fodder, and the share of fodder in the prime cost of meat is roughly the same. Agricultural experts have said wholesale pork prices will rise by 25% and beef prices by 30%. Prices of eggs went up by 8% in July for the same reason.
Vodka prices also heavily depend on grain prices. Pavel Shapkin, head of the parliamentary expert council on the alcohol market, said grain accounts for 70% of the prime cost of alcohol, which will grow by 20% soon, or two rubles per bottle of vodka.
However, these unsettling figures did not stop Finance Minister Alexei Kudrin from saying in late July that the government and the Central Bank must keep inflation within the planned 8% limit.
They are using "macroeconomic tools to stabilize the growth of money supply" in order to attain that goal.
Sergei Ignatyev, head of the Central Bank, also believes that inflation will not soar above 8%. In fact, he expects deflation to set in in August.
But many other experts think inflation will rise to 9%-9.5%, and then only if the government restrains energy prices.
The battle against inflation is becoming political in view of the forthcoming parliamentary and presidential elections. Some analysts believe that the authorities will do their best to achieve the planned targets. But there are few instruments that can be used towards this end other than state regulation of gasoline prices, and continued ruble appreciation.
According to the Central Bank, ruble appreciation by 1% brings inflation down 0.3%. Specialists from the Bank of America said the dollar should cost 24.7 rubles for inflation to be kept below 8%. Their colleagues from the Swiss-based UBS believe the dollar will slump to 24.5 rubles by the end of the year.
This would be easy to do, because the ruble is undervalued now and should cost 40% more compared with the U.S. dollar, about 15 rubles per $1, say analysts from Merrill Lynch.
So, Kudrin knew what he was talking about last year when he said the ruble would soon become the most stable currency and urged Russians to keep their savings in the national currency.
It appears that his call has been heeded. The number of Russians who keep their savings in U.S. dollars went down from 15% in January to 5% in July.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
