CPI down 0.5% mom in July, PPI up 3.6% mom

According to the State Statistics Committee, consumer inflation decreased 0.5% mom in July and made up 26.8% yoy. Food prices, the main contributor to current inflation, decreased 1.3% mom in July. Producer prices rose 3.6% mom or 46.4% yoy in July. Andrii Parkhomenko: Although current deflation is mostly attributable to seasonal factors, such as abundant supply of fresh vegetables and fruits, we bet that CPI inflation will keep decelerating through yearend and will reach a mark of 21.0% yoy in 2008. The slowdown in the CPI should be determined by stabilized food prices and high comparison base. Uprise in producer prices is likely to stop in coming months, as major drivers of producer inflation, oil and steel prices, have seemingly played out.