In the first nine months of 2007, consumer prices in Russia grew 7.5%, or 0.3% more than in the same period last year. The economics ministry said on Wednesday that inflation would exceed 9% in 2007.
"Strict control over fluctuations in the money supply should be a priority instrument in the fight against inflation in Russia," Alexei Kudrin, who is also a deputy prime minister, said in an article published on Friday in Russia's Voprosy Ekonomiki (Economy Issues) magazine.
According to Kudrin, anti-inflation instruments must include both measures limiting the excessive growth of money supply and measures stimulating money demand, which could also increase the monetization of the economy.
The minister also outlined other measures, including the stimulation of savings among Russian citizens, reforms on the labor market and liberalization of the energy, telecommunications and transportation markets.
At the same time, Kudrin said it would be difficult to force a decrease in inflation in the mid-term, due to high prices for Russia's main exports, inefficiency of the sterilization instruments used by Russia's Central Bank, excessive monopolization of some commodity markets and a sharp increase in prices and tariffs for products and services provided by natural monopolies.
Citing the examples of developed countries where inflation is maintained at 2-3%, the minister said it would take 20-30 years of well-planned consumer price control policies to significantly reduce inflation in the country.
In addition, the minister said the government should conduct consistent and transparent anti-inflation policies at all executive levels to ensure stability and trust among producers and consumers.
"If economic agents are certain that the authorities will keep their promises, they will not introduce excessive prices on their goods, and as a result, employees will not demand salary increases and the speculation on financial markets will be minimized," Kudrin said.
