Ukraine consumer inflation speeds up to 1.1% growth in March

Ukraine’s consumer prices grew 1.1 m/m in March,
speeding up from 0.9% m/m growth in the prior month, the State Statistics Service
reported on April 10. Meanwhile, yearly inflation slowed down to 13.2% yoy from
14.0% yoy in February. Food prices increased 1.1% m/m, keeping the same growth
rate as in the prior month. Prices for clothing and footwear jumped 9.6% m/m
from a decline of 2.8% m/m in February.

After being a significant inflationary factor in
January-February, transportation prices declined 0.7% m/m (from a growth of
1.5% m/m in February and 3.0% m/m in January). Utility prices increased 0.3%
m/m, slightly slowing down from 0.4% m/m in February.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) accelerated to 1.4% m/m growth
(9.4% yoy) from 0.6% m/m (9.7% yoy) in February.

Evgeniya Akhtyrko: A jump in
clothing and footwear prices related to the seasonal change of collection by
retailers outweighed the disinflationary effect of transportation prices. The
March acceleration of core inflation implies that non-monetary factors remain
significant in current inflationary trends.

The slowdown in yearly inflation to 13.2% yoy means
that Ukraine’s central banks is not likely to hike further its key policy rate
at its upcoming meeting on April 12, leaving it at 17.0%. We don’t expect to
see a convincing downward inflationary trend until 2H18. According to our
projections, CPI will increase 8.9% YTD, or 11.8% yoy in 2018.