Updated September 18, 2008

   In August, the price growth decelerated and even stopped in

the majority of the world countries.

However, in Russia, the inflation is escalating – it reached 0,3% within the half of September, according to the calculations of Rosstat (Federal State Statistics Service). Moreover, since the beginning of the year, the inflation attained 10%.

   As for the other countries, on the contrary, the inflationary pressure is falling.

Within the August, the prices of the USA fell by 0,1%, and the annual index (growth for 12 months) went to 5,4% down. In August, the prices of both Euro area and the overall European Union fell by 0,1%. It is the first price drop within the four months in the Eurozone.

In August, the prices in Germany fell by 0,4%, in Greece – by 1,1%, in Slovenia – by 0,7%, in Spain and Poland – by 0,2%. The prices remained unchanged in Ireland and France.

   In China, the prices are falling already within four successive months: in August, the annual index fell to 4,9% (the peak was in February – 8,7%), since it was backed by the severe restriction of consumer spending.

Now, the government can increase the prices for the state-funded energy resources.

According to the calculations of Morgan Stanley, in 2007, China's budget allocated $27 billion for this funding.

   The inflation fell due to the prices drop for primary products.

Oil fell by 36% as compared to the July maximum of $147,27 per barrel. Six food products, the prices of which monitors the Food and Agriculture Organization of the United Nations, fell by 8,2% since June. The grain fell by 13,6%, dairy products – by 12%. In December, the futures on wheat will be traded at the level of $7,3 per one bushel, and in February it attained $13,5. In Australia, the harvest of wheat exceeds the level of the last two years combined, and in China and India – higher than the last year's.

Nevertheless, on Philippines, the inflation attained 12,5% in August (the record for 16 years). Moreover, the inflation grows both in Chile and in Sri Lanka.

   As for Russia, the core reason of prices growth is the increase of the budget's expenditures by 40%, Troika Dialog's senior economist Evgeny Gavrilenkov says.

"The countries, where the inflation is 2-5% per year, don't have such growth", he announces.

   However, Russia has crossed already the inflationary peak, Mr.

Gavrilenkov supposes. The peak fell to June-July, and by the year-end, the inflation attains 14%. The measures on the backing of the financial markets announced on September, 17 will compensate the capital outflow, and

will not result in the considerable

inflation growth, he says. The core reason of the inflation growth worldwide is

the soft monetary policy of the USA and China, the economists of the Petersen Institute for International Economics Adam Posen and Arvin Subramanian state. Mr. Gavrilenkov agrees that the USA have influenced indirectly on the growth of Russia's inflation, since the dollar weakening and the oil prices growth have led to the growth of the currency revenue, the budgetary funding and, as a result, to the inflation growth.