Ministers See Inflation Hitting 10%

The Economic Development and Trade Ministry on Thursday raised its inflation forecast for 2008 to 9 to 10 percent from the previously predicted 8 to 9.5 percent, ministry documents obtained by Reuters showed.

The ministry increased its inflation forecast for 2009 to 6 to 7.5 percent from 6 to 7 percent and for 2010 to 5 to 7 percent from 5 to 6 percent, the documents showed. In 2011, it sees inflation at 5 percent to 6.8 percent from an earlier forecast of 5 to 5.8 percent.

Forecasts for gross domestic product growth were also revised up to 7.6 percent from 7.1 percent in 2008 and to 6.6 percent from 6.3 percent for 2009.

The data followed a comment Wednesday by Finance Minister Alexei Kudrin, who said inflation of 10 percent was possible in 2008. His comments came after official data showed the consumer price index rose 5.6 percent from the start of the year to April 14, led by a surge in the price of some food products.

On Thursday, another Finance Ministry official echoed this view. "It will likely be in double digits this year," Alexei Savatyugin, head of the ministry's financial policies department, said at a roundtable session.

Economists polled by Reuters see annual inflation at a median of 10.8 percent.

Inflation has become the main headache of the government as the country enjoys its 10th year of economic growth. Consumer prices rose 11.9 percent in 2007, exceeding the government's target of around 8 percent by a wide margin.