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Russia EconMin ups 2008 inflation forecast to 9-10%

Russia’s Economy Ministry on Thursday raised its inflation forecast for 2008 to 9.0-10.0% from the previously predicted 8.0-9.5%, ministry documents obtained by Reuters showed.

The ministry increased its inflation forecast for 2009 to 6.0-7.5% from 6.0-7.0% and for 2010 to 5.0-7.0% from 5.0-6.0%, the documents showed. In 2011, it sees inflation at 5.0-6.8% from an earlier forecast of 5.0-5.8%. Forecasts for GDP growth were also revised up to 7.6% from 7.1% in 2008 and to 6.6% from 6.3% for 2009.

The data followed a comment on Wednesday by Finance Minister Alexei Kudrin, who said inflation of 10% was possible in 2008, the first official acknowledgement that the government may struggle to keep consumer price growth within single digits. Kudrin’s comments came after official data showed Russia’s consumer price index rose 5.6% from the start of the year to April 14, led by a surge in the price of some food products.

On Thursday, another finance ministry official echoed this view. “It will likely be in double digits this year,” Alexei Savatyugin, head of the ministry’s financial policies department, said at a roundtable session. Economists polled by Reuters see annual inflation at a median of 10.8%. Inflation has become the main headache of the Russian government as the country enjoys its 10th year of economic boom. Consumer prices rose 11.9% in 2007, exceeding the government’s target of around 8% by a wide margin. (Reuters)