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Russian Inflation Slowed to 9.1% in November as Demand Fell

Russia’s inflation rate fell to the lowest level in more than two years last month after the deepest recession on record blunted demand, opening the door to further interest rate cuts from the central bank.

The rate fell to 9.1 percent from 9.7 percent in October, the Moscow-based Federal Statistics Service said in an e-mailed statement today. That compares with the median estimate in a Bloomberg survey of 18 economists for 9.3 percent. On the month, prices rose 0.3 percent after failing to grow in the previous three months.

Slower inflation has allowed the central bank to cut its key rates for a ninth time since April in an effort to spur lending and underpin the recovery. The economy shrank a record 10.9 percent in the second quarter and 8.9 percent in the third as companies struggled to raise funds and consumer lending declined.

Lenders’ corporate loan books fell 0.5 percent in October, after declining 0.7 percent in the previous month, according to data published on the central bank’s Web site yesterday. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline.

Inflation for the year will be 9 percent or “slightly” higher, First Deputy Central Bank Chairman Alexei Ulyukayev, said this week. That compares with a rate of 13.3 percent in 2008 and would mark the second time in Russia’s post-Soviet history that year-end inflation will be less than 10 percent.

The country’s policy makers are still haunted by hyper inflation that consumed personal savings. Russians lived through inflation rates in excess of 1,000 percent after the country abandoned central planning for market prices in the early 1990s and more than 100 percent after the country’s 1998 default on $40 billion of domestic debt.

via Russian Inflation Slowed to 9.1% in November as Demand Fell – Bloomberg.com.

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