Russian Economic Ministry says inflation not to slow to 7 percent

The Russian Economic Development Ministry says inflation will not slow to below 7 percent in annual terms this side of the second half of 2012.

"We expect inflation to start to slow in annual terms from the end of spring, but it will be below 7 percent only in the second half," Oleg Zasov, head of composite macroeconomic forecasting at the ministry, told reporters.

Relatively high inflation will be observed in the first half of this year, Zasov said, because of the effect of a low inflation rate in January-May of last year.

Deputy Economic Development Minister Andrei Klepach, in comments on the ministry's 0.6-0.7 percent February inflation forecast, and accordingly, annual inflation quickening to 7.3-7.4 percent (prices rose 0.4 percent last February), said that prices have been rising for food goods, including grain, but that this growth has slowed somewhat.

"It means, prices for bread are also growing but, clearly, there will be a turning point. Meat and dairy product will grow more costly," he said. "The main drop in annual inflation will be seen in the second half, but in principle there could be a decrease in the second quarter," he said.

Klepach said that in any event inflation "is not very high and not much over the forecasts."

"The percentage rate needs to be lowered, in my view, but clearly the Central Bank is not moving to that," he said.

As to the forecast for this year as a whole, the inflation range is 5-6 percent, "but our estimate is closer to 6 percent," he said.

Russia had inflation of 6.6 percent in 2012.

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