Ukraine CPI increases 2% in November

Ukraine’s consumer prices increased 2.0% m/m (46.6% yoy) in November compared to a 1.3% m/m decline in the prior month. The price increases were led by utilities (+3.3% m/m compared to -13.8% m/m in October), food (+2.5% m/m vs. +1.1% m/m) and transportation (+0.6% m/m vs. -0.6% m/m). At the same time, inflation for other core components like clothing/footwear and education slowed down to +0.8% m/m (+3.6% m/m in October) and +0.3% m/m (+0.5% m/m in October), respectively. Healthcare prices growth remained almost unchanged at +0.6% m/m compared to +0.5% m/m in the prior month.

Alexander Paraschiy: Consumer inflation ups and downs have been hard to assess in 2015 as the CPI was made extremely volatile by a change in CPI methodology, strong seasonal effects as well as complicated rules for setting gas and heating rates. November was not an exception in this story as consumer prices rose stronger than we projected on the back of accelerated seasonal food inflation.  Given the November results, we are updating our 2015 inflation forecast to 44.2% YTD (48.6% yoy) in 2015 compared to 42.5% YTD (49.1% yoy) estimated previously.

In regards to 2016, we expect inflation to ease on the back of a stabilized hryvnia exchange rate. By the 2016 year end, we project CPI increasing 8.6% YTD (13.7% yoy).