“Unfortunately, this year inflation has been growing,” Siluanov said. “It is most likely to reach 11.5%, maybe higher, this year,” he said.

Russia’s state statistics service, Rosstat, reported on Wednesday that the country’s inflation soared to a record 0.9% in the week of December 16-22 and reached 10.4% since the start of the year. This is the highest rate since the economic crisis of 2008.

Russia’s consumer prices have risen by as much as 1.7% since early December, Rosstat said. Considering the corresponding data for last year, inflation grew at an annual rate of 10.5% as of December 22, above the Central Bank’s most conservative scenario of 10.1%.
Earlier this week, Russia’s former finance minister, Alexey Kudrin said Russia’s inflation may hit 12-15% next year.

Russia`s budget deficit in 2015

Russia’s budget deficit will be larger than 0.6% of GDP in 2015, Siluanov said. “Obviously, with smaller revenues and unchanged basic expenditures, we’ll propose deciding on tighter priorities next year,” he added.

“The planned deficit of 0.6% of GDP will be considerably larger,” the finance minister said. Russia’s policymakers will draft measures to lower interest rates for systemically important sectors, Siluanov noted.

As budget revenues are expected to decline next year, the government will have to use the Reserve Fund and increase the budget deficit, the finance minister said. “But the main thing is that we should use the next year to take necessary decisions on improving and balancing the budgets of 2016-2017 and subsequent years,” Siluanov said.

“One year with a deficit is not a frightening thing. The most important thing is to bring our commitments in line with our new possibilities,” the finance minister said.

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