Ukraine consumer inflation accelerates to 9.5% in May

Annual inflation in Ukraine reached 9.5% yoy in May,
accelerating from 8.4% yoy in April, the State Statistics Service reported on
June 9. Ukraine’s consumer prices jumped 1.3% m/m in May after increasing 0.7% m/m
in April.

The growth of food prices accelerated to 1.7% m/m in
May from 1.2% m/m growth in April. Prices grew the most for fruits (14.5% m/m),
vegetable oil (6.8% m/m) and meat (1.8% m/m). At the same time, prices for eggs
plummeted 17.5% m/m, vegetable prices slid 0.5% m/m. Alcohol and tobacco added
0.7% m/m in May (vs. 0.9% m/m growth in April).

Prices for housing and utility services advanced 3.9%
m/m (after adding 0.4% m/m in April), driven by a 14.6% m/m jump in prices for
natural gas.

Prices for clothing and footwear dropped 0.6% m/m
after increasing 0.9% m/m in April. Prices for transportation grew 0.7% m/m in
May after increasing 0.6% in April.

Evgeniya Akhtyrko:  Food
prices remain the major driver of consumer inflation in Ukraine  as they
bring it to a two-year high. It looks like Ukrainian consumers are quite able
to accommodate a new higher level of food prices driven by a protracted period of fast global food price rises.

The tariffs for household natural gas, which were
unleashed after being frozen during the cold season, also contributed to
inflation heating up in May.

Meanwhile, prices for clothing and footwear declined
after a jump in previous months. A 1.2% monthly appreciation of the national
currency was a likely factor of this decline as it made imported items less
pricey.

Summer deflation amid an increased agricultural
supply may help inflation cool. If it doesn’t happen, our current consumer
inflation forecast of 8.0% YTD in 2021 will be too optimistic.