The government is considering setting retail price ceilings for basic foods, Deputy Industry and Trade Minister Stanislav Naumov said Tuesday.
The worst drought in at least 50 years has slashed harvests across Russia, fueling inflation. August consumer prices rose 0.6 percent from the previous month, the most in a decade. VTB Capital on Monday revised its 2010 inflation forecast to 8 percent from 7.6 percent.
"Sharp price growth, low development of retail chains" means that the government needs to curb prices in some regions, Naumov told reporters Tuesday. "It's necessary to institute a maximum retail price for those products that are in short supply."
The government may set price curbs for 24 staple food items, Naumov said, without specifying what they would be.
President Dmitry Medvedev's top economic adviser said he opposes imposing maximum prices. "Setting a price ceiling is a risky idea," Arkady Dvorkovich told reporters Tuesday. "It may lead to goods disappearing from the shelves."
Russia will lose about 30 million tons of grain as a result of the drought, though the country has enough grain for domestic needs, Prime Minister Vladimir Putin told a United Russia conference in Nizhny Novgorod.
"Not allowing speculation on the food market" is a priority for the government, he said in televised comments.
He said the government would allot 2 billion rubles ($65 million) to subsidize railroad tariffs for delivering grain to drought-stricken regions.
The Central Bank kept its main interest rates unchanged last month as policymakers, including Finance Minister Alexei Kudrin, said inflationary pressures triggered by the drought could not be stemmed by monetary policy. Consumer price growth may accelerate to 0.8 percent in September, Deputy Economy Minister Andrei Klepach said Monday, RIA-Novosti reported.
"A pickup in inflation would add support to our view that interest rates should begin to rise as early as October-November," Natalya Orlova and Dmitry Dolgin, analysts at Alfa Bank, said Tuesday in an e-mailed note.
Inflation is set to reach 7 percent to 8 percent at the end of the year, according to government estimates. Citigroup forecast that consumer price growth will reach an annual 9.2 percent.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
