Year-to-Date Inflation Pushes Past 10%

MTButchers displaying cuts of meat at a Moscow market. The price of meat, along with other goods, rose this month.
Consumer prices rose 0.5 percent in the first three weeks of September, according to official data Wednesday that pointed to an acceleration in inflation this month.

Prices jumped 0.2 percent in the week to Monday -- the biggest weekly increase since mid-July. With about a week to go, September's inflation rate looks set to surpass August's 0.4 percent. Prices are already up 10.2 percent in the year to date.

"It is a horrible number," said Yulia Tseplyayeva, chief economist for Russia and CIS at Merrill Lynch, forecasting that prices would rise 0.7 percent in September as whole.

Increases in the cost of eggs, meat products, salt and sweet goods in the latest week offset a 1.5 percent fall in fruit and vegetable prices and cheaper gasoline.

Officials had hoped that a good harvest would tame price pressures in the late summer and fall, but the impact has been offset by other factors, including a weakening ruble.

The measures taken by Russian authorities to avert a financial market crisis this month are expected to push prices up in the future.

"It is very hard at the moment to take aggressive anti-inflationary steps because measures that lower inflation also reduce liquidity," Tseplyayeva said.

"At times of instability, inflation usually rises, and we have had a significant depreciation of the ruble. ... If the situation develops in a negative way and people lose trust in the banking system, that would be another reason to spend."

The Central Bank has said 2008 inflation will probably come in at 12 percent, overshooting its target of around 11 percent.

The Economic Development Ministry, however, is still hoping that inflation will be lower than the 11.9 percent recorded last year.