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Experts voice inflation warnings

February 08, 2008 | RBC

Inflation is expected to be between 12 and 15 percent in 2008, according to the results of the round table meeting “Inflation expectations 2008: current moment” on Thursday. The country’s leading analysts gathered to discuss current inflation processes in the Russian economy, as well as possible effects from anti-inflation measures taken by the authorities.

According to Kirill Tremasov, Director of the Bank of Moscow’s Analytical Department, inflation could rise to 14-15 percent by the end of this year, climbing fast in the first half of the year and slowing in the second six months.

“To keep inflation within 10 percent in 2008 is an unrealistic task, it would be far more realistic to prevent it from rising above the 2007 levels,” Tremasov noted. He expects inflation to drop to 7 percent over the next three years.

The expert blames spiraling inflation on external factors. “We are importing inflation. World commodity and food prices are surging. Russia could have insulated itself if it had a self-sufficient economy,” Tremasov said.

For his part, Roman Andreev, Vice President of Centreinvest Group, said it was “very convenient to speak of inflation import,” especially given that inflation is much lower in Europe compared to Russia. “If we speak of importing inflation, this means that no one is at fault in our country,” Andreev stressed.

Among the main reasons for inflation he named the monopolization of economy, a significant inflow of foreign capital, and misbalances in the industrial sector. Andreev projects inflation to be 12 to 13 percent in 2008 and between 1.7 and 1.8 percent for February.

Evgeny Nadorshin, chief economist at Trust Bank, views high inflation in January as ‘deferred inflation’ of 2007. He expects a 1.6 percent inflation in February, 1 percent in March, and 5 percent in the first quarter of 2008.

The meeting was also attended by Dmitry Belousov, an expert at the Center for Macroeconomic Analysis and Short-Term Forecasting, Elena Sharipova, chief economist at Renaissance Capital, Natalya Orlova, chief economist with Alfa Bank, as well as analysts from Troika Dialog and UFG Invest.

According to the Federal State Statistics Service, inflation in January 2008 stood at 2.3 percent in Russia, up from 1.7 percent in January 2007 and 1.1 percent in December 2007.

The Economy Ministry’s inflation forecast for 2008 is 7.5 to 8.5 percent, and 1.8 percent for January 2008.

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