July 4 (Bloomberg) -- Russian inflation soared to the fastest since August 2011 as the ruble weakened.
Consumer prices rose 7.8 percent in June from a year earlier after gaining 7.6 percent in May, the Federal Statistics Service in Moscow said today in an e-mailed statement. That exceeded the median estimate of 20 economists in a Bloomberg survey for 7.7 percent. Prices grew 0.6 percent on the month.
Russian policy makers are laboring to curtail inflation after raising their benchmark interest rate 200 basis points since February. Sanctions by the U.S. and its allies over the conflict in Ukraine exacerbated capital outflows and stoked the ruble’s decline. It’s the third-worst performer against the dollar this year among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso and Hungary’s forint.
“We still see the effect of the ruble’s devaluation at work here,” Natalia Orlova, chief economist at Alfa Bank in Moscow, said by phone before the release. “June is the peak month. We expect inflation to slow to 7.3 percent in July.”
The ruble fell, heading for its worst weekly performance in a month. The currency declined 0.2 percent against the central bank’s target basket of dollars and euros to 39.9388 by 1:27 p.m. in Moscow, heading for a 1.6 percent slide in the week. It’s the worst performer this week against the dollar among emerging-market currencies, data compiled by Bloomberg show.
A weaker local currency boosts inflation by making imports more expensive.
Weekly price growth shows signs of stabilization, central bank Chairman Elvira Nabiullina said July 1 in St. Petersburg. Inflation will begin “seriously decelerating” in July because of slower growth in regulated prices this year, Maxim Oreshkin, director of the Finance Ministry’s strategic planning department, said June 25.
Inflation expectations remain high. Eighty-four percent of Russians see prices rising faster in the coming month, according to a poll published June 29 by the Public Opinion Foundation.
While the central bank isn’t planning to change its 6 percent forecast for 2014, inflation may reach 6.5 percent by year-end, according to First Deputy Chairman Ksenia Yudaeva.
The monetary authority, which targets 5 percent inflation this year and 4.5 percent in 2015, missed its goal of 5 percent to 6 percent last year.
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