Ukraine CPI grows 0.2% in January

Ukraine’s consumer prices increased 0.2% m/m in January 2014 (+0.5% yoy), according to state statistics released on February 6.  Food price growth slowed down to 0.4% m/m vs. 0.8% m/m in December 2013.  At the same time, non-food prices sped up, namely healthcare +0.2% m/m (vs. 0.1% m/m a month ago), education +0.1% m/m (vs. -0.2% m/m) and transportation +0.4% m/m (vs. -0.4% m/m).

Alexander Paraschiy: In general, January CPI was in line with our projections.  As we expected, food prices started sliding after accelerating at the end of last year. Though the increase in non-food prices is what underpinned CPI dynamics. We think CPI will speed up in the upcoming months in light of the hryvnia devaluation. So far this year, the hryvnia has fallen 8.5% to UAH 8.9/USD. If the local currency stabilizes at this rate throughout the year, CPI may reach 4.2% yoy in 2014 (vs. our estimate of 3.1% yoy, based on no-devaluation assumption).