Ulyukayev: year-over-year inflation rate in Russia is 17% in March and reaches peak in April

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In March year-over-year inflation will be 17%, the level will reach the peak of more than 17% in April, said the Minister of Economic Development of Russia Alexey Ulyukayev to reporters in Milan.

"Year-over-year inflation rate can reach 17% in March. In April we`ll observe the highest rate - at the level of 17% or more," he said.

As it was previously reported, according to the latest forecast of the Ministry of Economic Development, inflation will reach 12.2% at the end of 2015, and the average annual inflation will be 15.8%.

According to the Federal State Statistics Service, year-over-year inflation rate reached 16.2% as of February 24.

On indexation of natural monopolies tariffs

Alexey Ulyukayev thinks that in 2016 the tariffs of monopolies should be indexed on the basis of the inflation rate of 5.5% which was initially estimated for 2015. "We have no reasons to give up the basic principle based on inflation forecast of the preceding period," said the Minister.

He reminded that, according to the revised forecast, inflation should reach 12.2% at the end of 2015.

Answering the question of whether tariffs will be adjusted on the basis of this inflation forecast or not, the Minister said that "this issue is to be discussed". "My personal opinion is that indexation should be based on the initial inflation forecast of 5.5%," he said.

However, the Minister noted that it is necessary to figure out how it will influence operating and capital costs of natural monopolies.

As previously reported, Head of the Federal Tariff Service (FTS) Sergey Novikov sent a letter to the Ministry of Economic Development on Friday proposing to raise the monopolies tariffs in 2016. FTS refers to high inflation risks. We don`t plan to adjust tariffs of monopolies in 2015, assured the representative of FTS.

According to “Vedomosti”, in 2016 the cost of electricity may be increased by 16.9% (with the inflation of 7.5%) or by 19.59% (with the inflation of 12.2%), believes FTS. Earlier the Ministry of Economic Development forecast electricity tariffs to grow by 9-9.2%. FTS proposes to heat tariffs by 15.5% at most (with the inflation rate of 12.2%).

In 2016 the Russian Railways tariffs can be indexed by 15.8% if the the inflation is 5.5% as initially forecast, as we will need 60 billion rubles of budgetary money, says the Federal Tariff Service.

FTS offers to increase gas tariffs by 7.5-12.2% for industrial consumers and by 2% for citizens.

"Reasonable cuts" of budget expenditure

The Minister of Economic Development of the Russian Federation agrees with the Ministry of Finance on "reasonable cuts" of budget expenditure in 2015, he told reporters in Milan.

"It`s absolutely right to cut our budget expenditure reasonably. Because if household consumption falls, the government usually increases public demand," he said.

On additional capitalization of VTB and Gazprombank

The Minister of Economic Development of Russia Alexey Ulyukayev does not exclude additional capitalization of VTB and Gazprombank from the National Welfare Fund in the first quarter of 2015, said the Minister.

"I think yes," he said answering to the correspondent question. Speaking about the additional capitalization of other banks via federal loan bond mechanism, Ulyukayev said that he finds no difficulty in implementing this mechanism.

Deputy Minister of Finance Alexey Moiseev said earlier that the Russian authorities may not manage to increase the capital of VTB by 150 billion rubles from the National Welfare Fund in the 1st quarter of 2015. He noted that the sum of additional capitalization of VTB (150 billion rubles) and Gazprombank (100 billion rubles) from the NWF to implement investment projects remains the same, the only thing that can change is the terms. Additional capitalization is provided by the anti-crisis plan of the government.

On loosening embargo on food

Russia will consider possibilities to loosen embargo on food from Greece and Hungary not contrary to the WTO rules, said Alexey Ulyukayev.

"We need to find a solution that doesn`t go against the WTO rules. It`s impossible to make exceptions for certain countries," said the Minister.

According to him, possibilities are considered to allow goods from these countries into the Russian market via material-for-conversion and tolling mechanisms. Ulyukayev said that he had already been given a "verbal instruction to work out this issue", he hadn`t been given a written order yet.

Speaking about lifting Russian food embargo in general, the Minister said that "we can not exclude the fact that we can take unilateral measures, if our partners perceive them correctly".

As it was previously reported, on March 3 Greece intends to send an official letter to the Federal Service for Veterinary and Phytosanitary Surveillance of the Russian Federation (Rosselkhoznadzor) asking to lift temporary import restrictions imposed by Russia on a number of Greek goods. Deputy Minister of Agricultural Development of Greece Panayiotis Sguridis told this in his interview to TASS. Athens ask Russia to lift embargo and restrictions on the import of strawberries, oranges and peaches from Greece, said Deputy Head of Rosselkhoznadzor Alexey Alekseenko to TASS.

Text and pictures by TASS