Inflation Accelerates To 0.5% In May.

The inflation rate for the January-May period was 2.8%. Concorde Capital: After the CPI rate declined during March-April (0.3% and 0.4% respectively), the acceleration of consumer prices in May was caused by a 25% hike in gas and electricity tariffs for households from May 1, 2006. Prices for services are expected to replace food items as a key inflationary factor: in 5M06 the increase in food prices was 3.0% while prices for services grew by 4.4%. We expect CPI to accelerate further in 1H06 due to the upcoming 50% increase in tariffs for railway passenger traffic, the further 25% increase in gas/electricity tariffs (expected in July) and growth in tariffs for municipal and fixed-line telephone services. Currently we maintain our 10%CPI growth rate for 2006.