CPI down 0.2% yoy in January

Ukraine’s consumer prices declined 0.2% yoy in January (+0.2% m/m), according to a Feb. 6 UkrStat report. As previously, food prices (-2.2% yoy) were responsible for the result. Non-food items except for clothes (-2.4% yoy) continued demonstrating an upward trend with alcohol and tobacco (+6.7% yoy), education (+4.1%) and transportation (+3.6%) growing the fastest.

Alexander Paraschiy: Low inflation is unusual for January. A similar result (-0.1% yoy) was observed only ten years ago in January 2003 after the deflationary 2002. At that time, the sliding trend reversed itself in February on the back of faster food and service price growth. A repeat of the 2003 scenario is quite probable later in the year in light of expected gas tariffs increase and potential hryvnia weakening. Food prices should also rise unless administrative restrictions remain tight. In all, we expect the 2013 CPI at about 5.3%.