For about a year, president Vladimir Putin has been insistently asking his economics team – the central bank, minister of economic trade and development German Gref and finance minister Alexei Kudrin – to do something about Russia’s high inflation.
However, although the government has successfully reduced inflation from the 86% it was at when Putin was running for president in 1999, it has been unable to get it into single digits. The government tried to reduce inflation from 11% to 8.5% this year, but Gref, speaking at a conference in Moscow in November, admitted: “We won’t be able to stay within the target inflation rate this year, just as we failed last year. The end-of-year inflation rate will be closer to 11.5%. The problem is the extremely high oil prices.”
The government’s failure to tackle inflation has been giving ammunition to some of its most influential critics, such as Anatoly Chubais, the liberal chief executive of RAO UES. Chubais said on Russian TV in late October: “It is already evident that unfortunately inflation will not stop or slow down in 2005. It has been growing. And this is the most dangerous development.”