Ukraine consumer inflation stays at 2.4% yoy in July

Ukraine’s consumer inflation stayed at a 2.4% yoy
level in July, the State Statistics Service reported on Aug. 10. Consumer
prices dropped 0.6% m/m in July (vs. a 0.2% m/m increase in June), mostly
driven by price decline for food, clothing and footwear.

Food prices dropped 1.4% m/m in July (after climbing 0.4%
m/m in June). In particular, prices declined for eggs (-15.1% m/m), vegetables
(-15.0% m/m), sugar (-1.1% m/m) and milk (-0.7% m/m). At the same time, prices
for fruits climbed 1.1% m/m, for bread inched up 0.3% m/m. Prices for clothing
and footwear continued to decline losing 4.8% m/m in July (after falling 2.8%
m/m in June).

Prices for housing and utilities jumped 1.4% m/m (vs.
a 0.4% m/m decline in June) mostly due to an increase in natural gas prices by
7.5% m/m. Prices for transportation climbed another 1.2% m/m in July after the
same monthly growth in the prior month, being driven by increasing prices for
fuel and lubricants and growing prices for railroad transportation.

Evgeniya Akhtyrko: The monthly
decline of consumer prices in July was likely the result of both supply and
demand factors. A significant seasonal decline of prices for certain food items
amid increased supply is typical during summer months. At the same time, the
continuing decline of prices for clothing and footwear even amid a 2.2% m/m
depreciation of the national currency implies that consumer demand for
non-essential goods remains depressed.

We expect consumer inflation will accelerate to
5.7% YTD in 2020 (vs. 4.1% YTD in 2019).