Consumer prices fall 0.5% yoy in February

Ukraine’s consumer prices declined 0.5% yoy in February (-0.1% m/m), UkrStat reported on March 6. Further declines in food prices (-2.7% yoy) again was the main reason of deflation. At the same time, education (+3.7% yoy), transportation (+3.6% yoy) and healthcare (+2.1% yoy) prices continued growing over the month.

Alexander Paraschiy: Further consumer price declines, as presented by UkrStat, is rather unexpected for us and don’t match consumer perceptions. Against a backdrop of brisk price growth in the region (Russia, Belarus, Turkey and even Poland), Ukraine is demonstrating a steady deflation pattern that can hardly be explained by anything except internal price regulations. In light of the continued deflationary position of authorities, we revise our CPI forecast down to 3.1% yoy for 2013.  This estimate still presumes a natural gas tariff increase in compliance with IMF requirements.