June Inflation at 0.1%. This was a drop from 0.5% consumer price inflation in May.

Inflation in January-June came to 2.9%. Alexander Viktorov: A seasonal drop in food prices (which account for ~60% of the CPI basket) was the main factor that kept inflation low. A doubling of passenger railway tariffs and fixed-line telephone calls passed almost without notice, due to their small share (1.8%) in consumer spending. The 1H06 CPI rate was the lowest in the past 8 years except 2002. However, we expect price growth to accelerate in 2H06 due to the 85% increase in gas tariffs for households adopted on July 1 and seasonal food price increases. We maintain our annual CPI forecast at 10%.