Inflation Hits 4.8% Monthly

June inflation in Russia dropped well below expectations to 4.8 percent, hitting a second record low since prices were freed in January 1992, the State Statistics Committee reported Friday.Economists said the figure, down from 8.1 in May, was good news for the Russian economy in the long term since it would lead to lower interest rates paid both by companies for loans and the government to finance its deficit."It's very helpful to the Russian economy in terms of macroeconomic stability, breaking inflationary expectations and bringing in more foreign investment," said one Western economist.The Central Bank on Thursday had lowered its discount rate to 155 percent from 170 percent, following a reduction in the lending rates among commercial banks.Russian and Western economists had predicted that June inflation would be between 6 and 6.5 percent.The June figure was said to be a product of an even tighter monetary policy than the government had planned, with the first quarter deficit coming in below projections.Inflation gains, however, came at the expense of industrial production, which according to the State Statistics Committee fell 26 percent in the first five months of this year compared to the same period last year. Companies have cut back production as a result of reduced government funding and less investment in the economy.Lower inflation will also hurt budget revenues, since higher prices translate into more taxes.