Tuesday, March 25, 2008

Russian Economy on FIRE

Bloomberg.com: Economy:
"Inflation remains a rather serious issue for Russia,'' Medvedev said on his Web site today. ``This is a price that we are essentially paying for our presence in the club of world economic powers,'' Medvedev said in the transcript of an interview he gave to the Financial Times. Consumer-price growth in Russia, whose economy is expanding for a 10th year, has overshot the government's target in every one of President Vladimir Putin's eight years in power except 2003... Under Putin, who plans to remain in government as prime minister, average incomes have risen sixfold while foreign currency reserves have swelled to more than $500 billion. The surge in oil revenue and disposable income has fueled a consumer boom that has made it difficult to contain inflation, which accelerated 11.9 percent last year. "Naturally there are other factors contributing to our inflation; in particular we don't yet have a full-scale internal market for food products,'' Medvedev said. ``We are forced to buy many food products from overseas, and given the way prices are going up on world food markets, this is also having an impact.

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