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Russian premier believes additional oil revenues might provoke inflation surge

April 12, 2017, 18:19 UTC+3 MOSCOW

The premier says additional oil revenues might provoke growth of inflation above the planned 4%

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MOSCOW, April 12. /TASS/. Additional oil revenues might provoke growth of inflation above the planned 4% if they are simply allocated at increasing budget expenditures, according to Prime Minister Dmitry Medvedev.

"There is, of course, never enough money. However, we should take into account the fact that the influx of unplanned revenues, if commodity prices remain at the same level, could also bring negative consequences if used just to increase expenses - primarily for the inflation rate. It might surpass the target 4%. If this happens, growth of prices will negate all possible benefits from additional revenues," Medvedev said.

He added that in case of inflation surge "people will have to pay more money for the same products, banks will keep higher rates, and producers will not be able to increase sales." "In general, the risks in this case grow. Everyone understands that our task is to take care of those achievements in the field of inflation targeting, which we have recently chosen for ourselves," Medvedev said.

He also noted that Russia could strategically face another increase of the commodity market influence, "we are trying to achieve the opposite effect - to reduce dependence of the budget on oil prices.".

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