5 Aug 2010 12:52

Renaissance Capital ups inflation forecast to 7%-7.5% for 2010

MOSCOW. Aug 5 (Interfax) - The investment company Renaissance Capital has increased its inflation forecast for Russia this year from 6.3% to 7%-7.5%, a company report says.

"We think that the risk of an increased rate of inflation in Russia in the second half of this year has increased now on expectations of more substantial grocery product price rises than supposed earlier. The extreme heat for Russia could kill almost 20% of the expected grain harvest (the previous forecast was 85-90 million tonnes of grain) and has already led to growth in the price of grain on the domestic market since the beginning of May by 72%-102% for wheat and barley, depending on sort. Grain price growth is leading to higher costs to producers of grocery products and, consequently, higher prices on them for consumers," it says.

Renaissance Capital has also increased its inflation forecast for next year from 6.7% to 8.7%.