MOSCOW, October 8 (RIA Novosti) - Russia's Economic Development and Trade Minister Elvira Nabiullina said on Monday that the country's inflation would exceed the target level of 8% in 2007.
Nabiullina was commenting on the market situation at the Cabinet's meeting with President Vladimir Putin, who said he was unpleased with a growth in prices, particularly relating to foodstuffs.
"For the first time, inflation has exceeded forecasts to reach 0.8% [in September] and 7.5% in January-September, against 7.2% in the same period last year. This unfortunately means it will exceed 8% this year," Nabiullina said.
The minister attributed the growth in the prices of goods and services to a leap in world prices for agricultural products, which she said had been caused by a maintained and growing demand by developing economies, the demand for agricultural products that can be used as alternative kinds of fuel, Europe's abolishing of export subsidies, as well as the cutting of other subsidies for agricultural products.
"This has caused an upsurge in prices and unfortunately affected our economy. Besides this, the money supply showed rather high growth rates in the first half of this year, which was related to capital influx and GDP growth," Nabiullina said.
She said the government was drafting measures in terms of domestic trade regulations related to local monopolies in regional markets as the price growth was regionally differentiated.
Measures to encourage national agriculture are also being worked out, she added.
"In particular, we have submitted a draft resolution to raise wheat and barley duties, and the issue of duties on milk and dairy products is also under consideration," the minister said.
"We believe this will have the determined effect and help keep prices down on the domestic market," she added.
On Thursday, Nabiullina said her ministry would not review its 8% inflation forecast and would do its best to keep inflation within the set limits.
Inflation in January, February and March was lower than in the respective months of 2006, and consumer prices grew faster, year-on-year, in April, May, June and July. Inflation in August 2007 was lower than the August 2006 level.
Experts said 2007 inflation would reach 9%. BrokerCreditService (BCS), Russia's number one investment house, Troika Dialog, Russia's oldest and largest private investment bank, Deutsche Bank and Trust Investment Bank all plan to increase their inflation forecasts to 9%, 2006's level.
