Inflation rate hike a concern for economists

The rouble exchange rate is the main weapon used by the government to curb inflation. Russia's Consumer Price Index, the key measure of inflation, is sensitive to fluctuating prices, especially in the food market, which makes up 43 percent of the index.

Inflation for the month of July stood at 0.7 percent, up 0.5 percent compared to the same period last year. While the increase may seem insignificant, it has sent warning signals to economists that the government will miss its inflation target. Although the official inflation forecast for 2006 is between 7 and 8.5 percent, compared to 10.9 percent last year, the Ministry of Economic Development and Trade admits the actual numbers might be slightly higher. The main increase was sparked by consumer products including staple vegetables, public services and the cost of fuel, which has risen by around 15 percent compared to July 2005.