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The government’s campaign against inflation and unemployment is finally paying off: within a little more than a year since the economy bottomed out, Russia has made good progress in a Bloomberg rating known as the poverty index. Russia was only outpaced by Ukraine in terms of the rate of improvement. Meanwhile, it is too early to relax, experts warn, as inflation which is now picking up speed could ruin the achievement.

In the first half of 2010, the poverty index (inflation plus unemployment) stood at 12.6 percent for Russia, down 7.6 percentage points from 20.02 percent a year ago. Ukraine was the only country to outstrip Russia with a decline of 9.1 percentage points.

The data on people employed in the first half of 2010 published by the Federal State Statistics Service yesterday also inspire optimism. Although for the whole of the 6-month period, the number of dismissed people exceeded that of those taken on by 32,800, the number of people who got jobs in June alone topped that of people dismissed by 0.1 percent, or 23,300 workers.

This is natural because unemployment and inflation have been a special top priority, and the measures to improve the two indicators have finally worked, Alexei Kalinin, head of the state consulting at Business Solutions (Biznes Resheniya), said. “Unemployment is tipped to ease down gradually,” Nataluia Orlova, chief economic at Alfa-Bank, predicted.

Inflation, however, raises more concerns. Although it ended the first half of 2010 at a fairly low level (4.7 percent) as compared to 7.9 percent a year earlier, prices are likely to jump in the short term. Orlova sees the main reason for it in the drought which has pushed global grain prices higher. “We have revised our annual inflation forecast from 7 to 7.5 percent,” she warned. As if to prove her point, prices surged 0.3 percent in a single week closing in on the Economy Ministry’s upper limit of its July forecast.

Analytical department of RIA RosBusinessConsulting