Ukraine CPI declines 0.3% m/m in August

Ukraine’s consumer price index decreased 0.3% m/m (+8.4% yoy) in August compared to -0.1% m/m (+7.9% yoy) in the prior month, according to state statistics released on Sept. 8. The main factors in the deflationary trend remained falling prices for food (-1.0% m/m) and clothing & footwear (-3.3% m/m). Education prices fell 0.2% m/m after +0.5% m/m growth in the prior month. Utility growth rates slowed to +0.7% m/m (from +1.7% m/m in July) and transportation price growth eased to +0.2% m/m (+0.4%). Only healthcare prices strengthened to +0.3% m/m growth from +0.2% m/m a month ago.

In 8M16, CPI increased 4.5% YTD.

Alexander Paraschiy: The August price decline was somewhat stronger than we expected, though this result does not change our view on inflation prospects. We expect consumer price growth will accelerate by more than 1% in September after a 28% electricity rate increase implemented on Sept. 1. In October, new heating bills (heat rates doubled from July 1) should push CPI higher by almost 3% m/m.  For 2016, we still believe CPI will increase by 10.5% YTD (+14.5% yoy).