16 Sep 2010 17:47

Troika Dialog raises 2010 inflation forecast to 7% from 5.5%

MOSCOW. Sept 16 (Interfax) - Troika Dialog has raised its inflation forecast for 2010 to 7% from 5.5% previously, analysts Yevgeny Gavrilenkov and Anton Struchenevsky said in the month economic survey for September.

Declining offers on the agricultural products market is the main driver of inflation, but fiscal factors, particularly the accelerating growth of the money supply, will also play a role, the report says.

"Given inflationary expectations and the volume of free liquidity, which might help those expectations become reality, it is clear that inflation in September-October will be higher than in the same period last year, when it was zero. We now believe that inflation in 2010 will amount to 7%," it says.

However, a one-off reduction in the money supply that would follow, for example, a reduction in budget spending, could have a radical effect on inflationary expectations and make it possible to lower the rate. In that case inflation for the year will be about 6.5%.