CPI slows to 3.7% yoy in January

Ukraine’s CPI stayed at 0.2% mom in January, but decelerated to 3.7% y-o-y (from 4.6% yoy in December 2011), a multi-year low, according to UkrStat. January CPI came in well below the Reuters consensus (0.5% mom and 4.1% yoy) and our projection of 0.3% and 3.8%, respectively. Food (51% of the consumer basket) grew a mere 0.2% mom in price but declined 0.5% yoy. In annual terms, key inflation drivers were motor fuel and utilities, with prices rising 18.3% yoy and 10.0%, respectively.

Svetlana Rekrut: We expect inflation to remain muted for the next couple of months but speed up in 2H12, with prices for food and utilities being the main growth drivers. On the demand side, we expect growth in nominal wages to slow from last year’s 18% yoy, somewhat easing consumer price pressures. We see CPI picking up to 9.1% yoy by end-2012.