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. Last Updated: 07/27/2016

Bank Chief Puts Blame Elsewhere

Russians Central Bank chief Viktor Gerashchenko on Thursday blamed excessive government spending for the country's soaring inflation rate, reported at 29 percent in February.

Gerashchenko, in a speech before the Congress of People's Deputies, said that parliament and the government were responsible for more than half of the increase in the money supply last year, which fuels inflation.

The Central Bank chairman has repeatedly made such statements in response to criticism that the bank's loose credit policies were fueling price increases. Gerashchenko said Thursday that the goods shortages and monopolistic enterprises, which set artificially high prices, had a more substantial impact on inflation.

The 29 percent inflation figure in February, up from 26 percent a month earlier, would compound to an annual inflation rate of 2, 120 percent, roughly on par with last year.

Detailed figures, reported by the Izvestia newspaper Thursday, showed that price rises in basic food products averaged 24 percent, lower than in any of the previous five months. Despite the inflation, the volume of purchases of such products did not change significantly. Encouragingly, the report said that the inflation rate for freely traded products, as opposed to goods sold in state stores, dropped sharply.

Meanwhile the ruble was still unpredictable, falling marginally to a new low of 653 to the dollar Thursday, down from 650 in trade on Tuesday.

The fall in the ruble has run roughly parallel with inflation since mid-August last year. The ruble has plunged and stabilized erratically as Russians buy dollars as the only hedge against inflation. Volume traded Tuesday was $43. 7 million, up from $37. 33 million Tuesday, but well down from record levels. At the start of trade at Tuesday's rate, initial demand was $43. 88 million and initial supply was $39. 59 million.