Russia raises key interest rate amid inflation worries

A man carrying potatoes in Stavropol, Russia
Image caption Food prices in Russia have sky-rocketed in recent months

Russia has raised its key interest rate for the first time since 2008 amid concerns over accelerating inflation.

Moscow's Central Bank increased the refinancing rate to 8% from its historic low of 7.75%

Earlier this week, Finance Minister Alexey Kudrin said additional measures were needed to halt inflation.

Steps already taken include abandoning import duties to allow free access of food into Russia, and the sale of grain from the state fund.

Prices in Russia rose 8.8% over the last year and 2.4% in January alone.

The country's food prices sky-rocketed after last summer's severe drought which destroyed most of the harvest, and food import prices shot up as well.

Mr Kudrin said the government would try to meet its initial 2011 inflation target of 7%.

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