Ukraine consumer prices jump 0.8% in April

Ukraine’s consumer prices increased 0.8% m/m in April,
keeping the same monthly growth rate as in March, the State Statistics Service
reported on May 8. Consumer inflation was mostly driven by prices for food.
Annual inflation slowed to 2.1% yoy in April from 2.3% yoy in the prior month.

Food prices rose 2.1% m/m in April (after increasing
0.4% m/m in March). In particular, prices for fruits jumped 12.8% m/m, eggs
advanced 9.4% m/m, sugar increased 4.8% m/m and bread rose 2.3% m/m. In
addition, prices for alcohol and tobacco climbed 0.9% m/m.

Prices for clothing and footwear increased 0.4% m/m
(after surging 12.8% yoy in March). In addition, prices in healthcare jumped
2.1% m/m, mostly driven by prices for pharmaceuticals.

Prices for housing and utilities slid 3.2% (vs. a 2.8%
m/m decline in March) due to a plunge in natural gas prices by 11.9% m/m and a
drop in prices for hot water and central heating by 5.3% m/m. In addition,
prices for transportation declined 1.3% m/m amid sliding prices for fuel and
lubricants. 

Evgeniya Akhtyrko: The
accelerated price growth for foods in April was mostly driven by supply
deficiencies. Severe quarantine measures apparently resulted in the disruption
of some supply chains, which affected both the production and delivery of
foods. We expect consumer inflation will accelerate to 6% YTD in 2020 (vs. 4.1%
YTD in 2019).

The inflation trend will be affected by two
countervailing factors. On the one hand, the quarantine measures and expected
decline in personal income will suppress consumer demand significantly. On the
other hand, the expected increase of the budget deficit involves a significant
money injection into the economy, especially the consumer market.