Russia Inflation May 2008

Russian inflation accelerated to a faster rate than most economists expected in May -in the process achieving the fastest inflation in five and a half years. Russia's inflation rate rose to 15.1 percent from 14.3 percent in April, according to the Federal Statistics Service earlier today.



Russia is failing to bring inflation closer to the government target of 10.5 percent this year. Consumer-price growth quickened every month since September and has remained above target all this year. Many commentators are suggesting that the Russian government feel they can live with this rate because real wage growth remains very strong, but such a view is very dangerous. If Russian growth slows - or the price of oil drops suddenly - then we are going to see all sorts of problems here.