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. Last Updated: 07/27/2016

Producer Prices on the Rise

February producer prices rose 1.3 percent from the previous month, after declining in January, led by production and distribution of gas, power and water, the State Statistics Service said Tuesday.

February producer prices were 17.3 percent higher from the same month a year, ago, the service said in a statement. In the first two months of the year, the prices increased 18 percent from the same period a year ago, the service said.

"Producer prices increase at such a pace because of the higher cost of fuel, which results in higher costs of transportation," said Sergei Suverov, head of research at Gazprombank.

Higher producer prices lead to an increase in consumer prices.

The government has said it probably will not be able to meet its initial 8.5 percent target for 2005. Last year, the rate fell to 11 percent from 12 percent in 2003, the country's lowest since 1997.

The government wants to reduce the inflation rate to 7 percent in 2006, 6.5 percent in 2007 and 5 percent in 2008 from as much as 10 percent expected in this year, Interfax reported, citing Finance Minister Alexei Kudrin.

"This is achievable, even though the high oil price works in the opposite direction," Kudrin said at a conference in Moscow, the news agency reported.

Producer prices in production and distribution of electricity, gas and water rose 6.3 percent in February from the previous month, while prices in mineral extracting industries declined 1.6 percent, the service said. Prices in the oil extracting industry declined 6.2 percent, the service said.

Last year, producer prices rose 28.3 percent in December from the same month a year ago, after rising 13.1 percent in December 2003.