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. Last Updated: 07/27/2016

Gref Clings to Hope of Taming Inflation

VedomostiEconomic Development and Trade Minister German Gref
Consumer prices rose at a slower pace in May than in the same month a year ago for the first time in 2005, signaling the country may be able to hold inflation at the lowest level in almost a decade this year, Economic Development and Trade Minister German Gref said Friday.

Consumer prices will probably increase 0.6 percent in May from April, Gref said at a meeting with President Vladimir Putin. Consumer prices rose 1 percent in the same month last year. For the period of May 1 to May 16 this year prices increased 0.3 percent, he said.

"So far, May is the first month when we can state inflationary dynamics are lower when compared with last year," Gref said, according to a transcript of the meeting on the presidential administration's web site.

"I believe there is a chance," to keep the inflation rate within the 10 percent target for 2005, he said.

Gref also said that the economy grew 5.3 percent in the first four months of the year, Interfax reported. Gross domestic product grew 0.6 percent in April compared with March and 6.1 percent in April from the same month a year ago, Gref said.

Russia is struggling to keep inflation at bay, boost economic growth and raise living standards.

The International Monetary Fund forecasts Russia's inflation rate at between 11 percent and 11.5 percent in 2005, Putin said.

The economy probably grew in April at its fastest annual pace this year, led by manufacturing and services, which may ease concerns that the country's six-year boom is slowing, Moscow Narodny Bank said earlier this month.

Growth may have accelerated to 5.7 percent in April, from 5.1 percent in March and 4.2 percent in January, the bank said at the time, citing its GDP indicator.

Consumer prices rose faster than the government planned in the first four months of the year because of an increase in housing and utilities rates throughout the country and because of higher costs for manufactured goods.

In the first quarter, prices grew 1.4 times faster than in the same period a year ago, Gref said.

The government should try to restrict the increase in consumer prices to the planned limit, Putin said. "The government has set itself a target. It must strive to fulfill it," Putin told Gref.

Last year's inflation rate of 11.7 percent was the lowest since 1997, when it was 11 percent, according to Bloomberg data.

The government initially planned to keep inflation to 8.5 percent this year and then raised the forecast.

Russia's consumer prices rose 1.1 percent in April from the previous month, slower than the 1.3 percent in March as the ruble's strength helped keep inflation from accelerating. The ruble rose an inflation-adjusted 4.8 percent in the first quarter against a basket of currencies because rising prices for oil, Russia's largest export commodity, allow exporters to bring home more revenue.

(Bloomberg, Reuters)