Annual CPI hits multi-year low in November

Ukrainian consumer prices inched up 0.1% in November, taking the yoy tally to a multi-year low of 5.2% (vs. 5.4% in October), according to UkrStat. November CPI came in well below our projections (+0.6% mom and +5.8% yoy) and Reuters consensus (+0.7% mom and +5.7% yoy). Food prices continued to slow (-0.1% mom and +2.6% yoy), as did prices for motor fuel (-0.1% mom), though the latter, at +35.7% yoy, remains the key driver of annual inflation. In terms of demand-side pressures, the key relief came on a slowdown in bank lending caused by restrictive NBU policies. It is also noteworthy that prices for electronics, home appliances, and clothes (dominated by imports) remained virtually unchanged last month, a signal that importers’ hryvnya depreciation expectations remain muted. Svetlana Rekrut: With the autumn data on hand, we revise our 2011 CPI forecast from 10.0% to 5.1%. That said, we still expect price pressures to build in 2012 (projected CPI of 9.0%) as the effects of this year’s record harvest wear out.