Ukraine September CPI grows 1.8% m/m on utilities, clothing

Ukraine’s consumer price index (CPI) grew 1.8% m/m in September (+7.9% yoy, +6.4% YTD) owing to rising prices for clothing and footwear, which rose 10.3% m/m, and utilities, which grew 3.7% m/m, according to state statistics released on Oct. 7. That’s compared to a 0.3% decline (+8.4% yoy) in August.

September hryvnia depreciation (-4.2% m/m, on average) inflated devaluation expectations and caused the higher prices for clothes, most of which are imported, while utility rates grew on the back of a 27% m/m electricity rate hike that took effect on Sept. 1. Food prices also started recovering to +0.3% m/m growth, compared to a 1.0% m/m decline in August. All other CPI components also strengthened: education prices grew 5.3% m/m (-0.2% m/m in August), transportation rates increased 0.7% m/m (+0.2% m/m), and healthcare prices added 0.6% m/m (+0.3% m/m).

Alexander Paraschiy: The September CPI increase was in line with our expectations that the price declines we observed in the summer months would end in the first month of the fall. We expect CPI to add extra 2.8% m/m in October on the back of heating rates doubled from July, which will finally reach household bills upon the start of the heating season. With September meeting our expectations, we are leaving our 2016 CPI forecast at 10.5% YTD (+14.5% yoy).