* Drought, heat in Russia may hurt farm goods output
* Risks of higher inflation are mounting
* C.bank may consider hiking rates by the year-end
By Andrey Ostroukh and Elena Fabrichnaya
MOSCOW, July 16 (Reuters) - Russia's central bank may raise interest rates this year to contain inflationary pressure should a worsening drought hit farm output in Europe's leading wheat producer, economists said on Friday.
Soaring temperatures across large swathes of Russia since late June have destroyed nearly 10 million hectares of crops and have already cost the agricultural sector about $1 billion.
On Friday, SovEcon agricultural analysts cut their forecast for Russia's 2010 grain crop to below 75 million tonnes from 77 million-81 million tonnes, and predictions of poor yields have driven up the price of wheat futures.
With meteorologists forecasting at least another 10 days of drought and heat, economists expect the price of vegetables, fruits and grains to rise inside Russia itself, and some are beginning to ask if the central bank will raise interest rates before year-end to meet its inflation targets.
"So far there are no grounds to review the 2010 inflation target," Deputy Economy Minister Andrei Klepach said.
The government inflation target for 2010 is 6 to 7 percent but central bank officials have pledged to keep the Consumer Price Index rate below 6.0 percent this year. Prices have so far risen 4.6 percent since the start of the year.
August and September are months when Russian inflation typically slows due to the abundant supplies of crops, but key grain-producing regions along Volga river, southern Urals and European areas have seen temperatures above 30 degrees Celsius (85 Fahrenheit) for several weeks now.
"I think it will be an important subject. If such weather stays for a couple of weeks, such scenario (hike in rates) will be quite likely," Natalia Orlova, chief economist at Alfa bank, said. She sees 2010 CPI rate at 7.0 percent.
"Money market rates already tend to grow and the central bank is likely to decide hiking rates by the year-end."
Vladimir Osakovsky, chief economist at Unicredit bank in Moscow, said drought-driven inflationary risks increase the probability of higher interest rates closer to year-end.
Before taking a break in June, Russia's central bank had cut interest rates 14 times since April 2009, bringing the rates to record lows to revive domestic lending and ease speculative pressure on the rouble.
Some economists doubt that a drop in Russia's farm goods output will significantly increase inflation because existing inventories and other sources can meet demand.
"It's not inevitable that inflationary risks will arise. If we see low stocks imports will inch up," Evgeny Gavrilenkov, chief economist at Troika Dialog, said. He forecasts inflation at 5.5-6.0 percent.
(Editing by Lin Noueihed)