October consumer prices are flat for the third month

Ukraine’s CPI stood flat on both the mom and yoy bases in October, UkrStat reported yesterday. Prices for food and clothing, both -2% yoy, declined the most. Prices for most consumer basket items remained within a 1% range mom, except vegetables (-5.1%), sugar (-2.3%), railway services (-4.5%) and eggs (+4.4%).

Alexander Paraschiy: The supply-side inflation drivers (mainly a smaller grain harvest this year) are still offset by weak demand and low international soft commodity prices. While we still expect food prices increases in the coming month, we decrease our forecast of end-2012 CPI to 2.0%. The key upside factors for our forecast are possible utility prices hikes (but we believe new rates will be set only in 2013) and an increase in import prices in case the local currency devalues.