Ukraine consumer inflation speeds up to 5% in 2020

Ukraine’s consumer prices increased 0.9% m/m in
December after jumping 1.3% m/m in November, mostly due
to increases in prices for food, transportation, as well as alcohol and tobacco,
the State Statistics Service reported on Jan. 11.

Annual inflation sped up to 5.0% yoy from 3.8% yoy in
November (and 4.1% ytd in 2019).

Food prices advanced 1.7% m/m in December (after
increasing 1.3% m/m in November). Prices grew the most for eggs (16.1% m/m),
vegetables (8.3% m/m), and sugar (6.0%). Prices for alcohol and tobacco added
0.5% m/m in December.

Prices for transportation increased 0.7% m/m in
December, mostly due to increased prices for gasoline and lubricants (+2.5%
m/m)

At the same time, prices for clothing and footwear
dropped 4.6% m/m (after falling 2.5% m/m in November). Prices for housing
inched up 0.1% m/m (vs. a 8.0% m/m surge in November).

Evgeniya Akhtyrko: Consumer
inflation is gaining momentum in Ukraine, with demand being driven by the fast
growth of real income, specifically wages. At the same
time, high month-to-month fluctuations in prices for certain food items are
typical for Ukrainian consumer market. And this might intensify the inflation
expectations of individuals, feeding this self-sustaining cycle.

Consumer inflation is likely to speed up further in
January, as the hike of the minimum wage to UAH 6,000 per month will serve as
an additional factor for maintaining already high consumer demand. In addition,
the government plans to hike some utility tariffs amid growing prices for
energy resources.