Inflation could reach 6.5% in 2014 - new Econ Ministry forecast
MOSCOW. May 20 (Interfax) - The Russian Economic Development Ministry now forecasts inflation in 2014 in the range 5.5%-6.5% in addition to the point forecast of 6% contained in the working version of the document, according to the ministry's socioeconomic development forecast to 2017 approved at a government meeting on May 15 and circulated on Tuesday.
The Econ Ministry had raised the 2014 inflation forecast to 6% from 4.8%, and presented the higher point forecast to the government. The point forecast remains in effect, but has been supplemented with the 5.5%-6.5% range.
"Annualized inflation will reach a peak of 7.5%-7.6% in mid-2014, after which inflation is expected to slow as a result of the stabilizing ruble exchange rate and the lower indexation of utilities tariffs for households compared with last year. Higher interest rates will also restrain inflation as will the forecast slowdown in consumer spending. By the end of 2014, annualized inflation will slow to 6%," according to the ministry's forecast.
"At the same time there are risks of higher inflation, both in connection with the possible resumption of ruble weakening and the potential rise in grain prices (due to declining Ukrainian exports among other causes) and mismatches in supply and demand for meat products and cheese, in the event imports decline steeply," it says.
