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. Last Updated: 07/27/2016

Domestic Inflation 1.8 Percent in July

Domestic inflation slowed to 1.8 percent last month, down from 2.6 percent in June, the State Statistics Committee said Friday, but the annual rate is still expected to top the level written into the year's budget.

The July monthly rate works out to an annual 23.9 percent. That would be a significant improvement from 36.5 percent last year, but still be higher than the 18 percent rate envisioned by the government's 2000 budget.

Domestic inflation soared in June, partly due to the Central Bank's pumping out rubles to buy hard-currency revenues from exporters. The government ordered exporters to sell 75 percent of their hard-currency earnings to the Central Bank after its reserves dipped to worrying lows in the wake of the August 1998 financial crisis.

The Central Bank's reserves rose to $23.2 billion last week.

Meanwhile, President Vladimir Putin met with Finance Minister Alexei Kudrin on Friday to discuss next year's budget, which will be based on a simplified tax system approved by parliament.

As the government is trying to support domestic manufacturers, imports that are the same as goods produced in the country will be subjected to a higher tax rate than those without domestic equivalents, said German Gref, economic development and trade minister.