Ukraine CPI jumps to 3.3% m/m in April

Ukraine’s consumer prices sped up to 3.3% m/m (+6.8% yoy) in April, according to state statistics released on May 6. Transportation tariffs (+10.1% m/m), health prices (+5.8% m/m) and foodstuff prices (+4.2% m/m) increased the fastest throughout the month. Utilities and education prices have increased only modestly with +0.2% m/m each. 

Alexander Paraschiy: In April, the consumers’ index increased somewhat faster than we had anticipated (we estimated 2.4% m/m).  Significant overshooting of the hryvnia exchange rate throughout the month was the main reason of such results, we believe.  Importers, having observed the hryvnia sinking to just below UAH 13/USD, did not hasten to adjust prices after the hryvnia strengthened.  Apparently, this trend hit fuel prices the most and translated into an inflationary spiral to other commodities and services. 

In May, devaluation-driven inflation is likely to abate somewhat. The hryvnia, though undervalued, was rather stable and is expected to strengthen further on the back of IMF support.  Still CPI growth rate is unlikely to slow down much. In particular, from May 1, gas prices for consumers have increased 50% and foodstuff prices very likely will keep adjusting for new transportation costs.