OREANDA-NEWS. Given an upswing in the inflation rate in September, 2007 inflation could overrun the 8% rate targeted by the government, Economic Development and Trade Minister Elvira Nabiullina said on October 8 at a meeting between the Russian President and Cabinet members, Finam investment company reports with reference to a government source. September inflation exceeded the projected level, running at 0.8%.

All in all, in the first nine months of 2007 inflation weighed in at 7.5% or higher than last year (7.2%). This, unfortunately, means that we'll reach 8% inflation in 2007," Nabiullina said. She went on to say that the primary reason behind such a jump in September prices was an upswing in global agricultural prices. "This is attributable to several factors. Above all, there has been a steady rise in demand on the part of emerging markets - China and India - for agricultural feedstock used as an alternative fuel, biofuel," the minister pointed out. In addition, according to her, a substantial impact was produced by lower subsidies and the elimination of export subsidies for some products in Europe. "This translated into a higher jump in prices and unfortunately exerted an adverse impact on our economy," she said. Also, Nabiullina pointed out that money supply grew at a fairly high pace in the January-June period of 2007 "which is related to capital influx and growth in international reserves".