MOSCOW, June 20 (Reuters) - The Russian government on Thursday allowed gas giant Gazprom, national utility UES and the state railways to increase their prices starting from July, a senior government official said.
Economic Development and Trade Minister German Gref told a news conference that Gazprom would be allowed to hike its domestic wholesale prices by 15 percent, while electricity wholesale prices would rise by 2.4 percent and prices for freight railway deliveries by 6.8 percent.
The government has already allowed gas and electricity prices to increase by around 20 percent this year, setting a 35 percent ceiling for 2002 because of inflation fears. But Gref said the new rises would not have a serious impact on the consumer price index.
"According to the central bank and the economic and financial part of the government, we shall be able to adhere to the budgeted 12 to 14 percent inflation," he said.
"The monetary factor accounts for the bulk of inflation, and here the central bank should work. Everything will depend on the summer months and...the end of the year," he added, referring to traditionally low prices in the hot season and higher budget spending at the end of the year.
The gas, power and railway firms want to raise prices nearer to world levels to reflect production costs and end what is effectively a subsidy of the rest of the economy.
But fears of inflation as well as counter-lobbying from big industrial users of gas and electricity has created pressure to keep increases in check.
President Vladimir Putin has told powerful natural resource monopolies to put their houses in order and cut their costs instead of heaping price rises on Russia's hard-pressed consumers.
Local councils, which set communal charges, have been trying to raise prices and get consumers to pay the full rate for utilities in a country where nearly one third of the population lives below the poverty line.
That has led to public discontent and protest rallies in some regions, making price rises politically sensitive before parliamentary elections at the end of next year.
Gazprom, in which the state is a major stakeholder, however complains that it loses up to $1.5 billion on domestic gas sales a year, and only exports allow it to survive and invest in new fields and projects.
The world's biggest gas producer sells gas at home at a tenth of what it fetches in its key export market -- Europe.
Gref also said his ministry suggested raising gas prices by 20 percent, electricity by 14-16 percent and railway by 12-14 percent in 2003, when the government expects inflation to be 10-12 percent.