Price of Russian food, which were relaxed to help stabilize inflation may rise in June and July due to the resumption of exports of grain after the drought of last year and an embargo on imports of vegetables from the European Union.
Inflation remains at 9.6% for a second month of may, amounting to a maximum of 19 months, the Moscow-based Federal Statistics Service said yesterday in a statement by e-mail. Prices increased by 0.5% in the month after increasing by 0.4% in April.
The annual rate stabilized as the effects of the worst drought in 50 years Russia that have calmed, slow growth of the prices of food to 13.4% to 14.1% in April. While the Bank Rossii says its inflation target of 6 to 7% for 2011 is feasible, central bankers and analysts including ING Groep of NV Simon Quijano-Evans in London warn of threats over the next two months.
"The risks are clear and the Central Bank knows," Quijano-Evans, Chief Economist of ING Europe, Middle East and Africa, said yesterday. "We should always be able to end the year slightly below current levels.".
The situation of inflation "may suddenly turn" in early July, the month in which the price of food began their rapid ascent year last, first Deputy President Alexei Ulyukayev of the Central Bank said the newspaper Vedomosti in an interview published yesterday.
Prices of foodstuffs, which represent more than a third on the basket of prices, consumption remained unchanged from the previous month in may, after a growth of 0.4% in April and 0.9% in March.
The prices of products, including potatoes and of buckwheat jumped in 2010 after unusually warm weather destroyed crops across the country. Black earth of the Russia region, which represents a fifth of the production of grain in the country, is facing a drought "50-50" chance this year if temperatures remain close to 30 degrees (86 degrees Fahrenheit) even three weeks, Chief Financial Officer Michael Shneyderman Black Earth Farming Ltd said yesterday.
Lifting of the embargo on exports of cereals introduced in response to the shortage of harvest of the year is the only "risk factor" of inflation, the Central Bank President Sergey Ignatiev said last week. The resumption of exports to foreign markets more expensive July 1 may push higher domestic prices, Julia Tsepliaeva, responsible for research at BNP Paribas SA in Moscow, said on May 30.
Prohibition of the Russia on imports of vegetables fresh from the EU, imposed after an outbreak of e. coli, also promotes the price of foodstuffs. The ban will have an effect in the short term inflation, Deputy Chairman Sergei Shvetsov the Central Bank said, RIA Novosti reported yesterday.
Inflation, which totaled 8.8% in 2010, is ""in order,"Ignatiev, said on 26 May, before the Central Bank has indicated he would leave unchanged for several months, that risks to the economy have been balanced with pressures on prices for borrowing costs."
"We are probably very close to the Ridge, Paul Biszko, a strategist for emerging markets at the Royal Bank of the Canada, in Toronto, said June 3." Makers be to that future and assuming that there is no abrupt here acceleration. It will give them some room to take a break. »
The Central Bank last week raised its rate filing to 3.5% to 3.25%, 11 night surprise 20 economists in a survey of Bloomberg. He left key and redemption rate refinancing to the unchanged after a quarter-point in April increase.
The ruble, which increased by 9.7% since January, appreciated 0.4% to 27.8250 per dollar at 17 h near Moscow, the level stronger since May 11.
Consumer prices, which increased by 4.8% in the year to date, likely to increase 5.2% in the first half, while the third quarter can add percentage as 0.4 point total, Ulyukayev was cited by declaring Vedomosti.
"This means that we will enter in the fourth quarter with inflation accumulated approximately 5.5%," he said. "After this, the task - get through the fourth quarter with inflation monthly 0.5 per cent - is not simple, but it is not drawn by the hair that is.".
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net. Scott Rose to Moscow to rrose10@bloomberg.net.
To contact the editor responsible for this story: Balazs Penz in the bpenz@bloomberg.net
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