KIEV, Nov. 2 – The National Bank of Ukraine and the government should take coordinated steps as soon as this month in a concerted effort to curb growing inflation in 2007, President Viktor Yushchenko said Friday.

Ukraine’s consumer prices, led by energy and food, have been growing fast this year, challenging the government’s economic policy and undermining the official inflation forecast.

Yushchenko, himself a former head of Ukraine’s central bank, joined a meeting of the Cabinet of Ministers Friday for the first time over the past 1.5 years, a sign that growing inflation was his top economic concern.

“I believe that the national bank should quickly take a number of steps that would have a tactical effect on the situation,” Yushchenko said addressing the meeting.

Ukraine’s inflation has been rising fast and analysts said it could reach between 11% and 14% in 2007, compared with the 7.5% that the government has originally hoped to achieve.

The prices already rose 8.6% in January through the end of September, led by rocketing prices of food, including grain and sunflower seed oil, mainly caused by poor grain output. Growing prices of energy, such as oil and natural gas, has also been contributing to the increase.

Food prices rose a staggering 12.4% in January through the end of September, while prices of services, which heavily depend on energy prices, rose 8.7%, according to the State Statistics Committee. Manufactured good prices rose 1.1% in the same period.

The meeting, joined by the president, central bank and local government officials, comes a week after the government has taken its anti-inflation measures, including a ban on hikes of prices regulated by the state.

The meeting shows the measures have been failing to keep consumer prices in check, and now requiring the concerted effort by the government, the central bank and local authorities.

First Deputy Prime Minister and Finance Minister Mykola Azarov, who until recently had been defending the 2007 inflation forecast at 7.5%, admitted Friday inflation may reach about 11.6%.

Yushchenko said: “We have to be sure that the central bank, jointly with Anti-Monopoly Committee, sector ministries, local and central governments, are capable of coming up with a set of joint measures that would address this problem.”

Yushchenko did not specify the measures to be taken specifically by the central bank, but has spoken in favor of “strong” and “stable” hryvnia to motivate domestic producers.

“Everybody at work is motivated by strong currency,” Yushchenko said. “But strong currency must be stable.”

The NBU has been keeping the hryvnia tightly pegged to the U.S. dollar, but due to the dollar’s sharp depreciation against the euro over the past 12 months, the hryvnia has performed weaker against the euro.

This may prompt action from the NBU to change its policy and let the hryvnia slightly appreciate against the U.S. dollar, however, without any steep appreciation.

“The exchange rate of the hryvnia will be changed, but there will be no plunges, no explosions,” Petro Poroshenko, the head of the National Bank of Ukraine Council, a strategic policy setting body, said in a recent interview with Profil magazine.

Measures to be taken by the government will probably include a crackdown on illegal imports, increasing supply of commodities, such as grain, and tightening fiscal policy. “This must be the policy of strict budget control,” Yushchenko said. (tl/ez)