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. Last Updated: 07/27/2016

Gref: 2005 Inflation Under 11%

Consumer price inflation was 10.9 percent in 2005, slightly below the official target of 11.0 to 11.5 percent, Economic Development and Trade Minister German Gref said during a meeting with President Vladimir Putin on Tuesday.

The government had to revise its official inflation target twice this year from an initial 8.5 percent after a surprise hike in utilities' tariffs in the early months of 2005. A Reuters survey of 13 economists had predicted 2005 full-year inflation at 11.1 percent and suggested the chances of the government meeting its 8.5 percent inflation target for 2006 were slim.

"The government has achieved quite positive inflation results, although last year's monetary and budget policy pointed at a different direction," said Yevgeny Nadorshin of Trust Bank.

In December alone, the inflation rate slowed to 0.8 percent, compared with a month-on-month increase of 1.1 percent in December last year.

Russia, the world's No. 2 oil exporter, is raking in oil revenues.

The Central Bank buys up petrodollars to keep the ruble exchange rate competitive, but money supply is growing at an inflation-stoking rate of 40 percent as a result.

In October, Putin, worried by stubbornly high price pressures, asked the Cabinet to draft a package of measures to combat inflation. The plans, which included marketing savings bonds to retail investors to soak up extra cash, has yet to be discussed by the Cabinet.

Gref said prices for utilities rose by 32 percent in 2005 compared with 2004. He promised to keep 2006 price growth at around 20 percent. He said administrative caps helped to curb the growth of gasoline prices, which rose by 15.8 percent, compared with 31 percent last year.