Ukraine consumer prices drop 0.3% in February

Ukraine’s consumer prices dropped 0.3% m/m in
February, owing mostly to cooling prices for food, housing and utilities, and
clothing and sportswear, the State Statistics Service reported on March 10.
Annual inflation slowed to 2.4% yoy in February from 3.2% yoy in the prior
month.

Food prices declined 0.4% m/m in February (after
rising 0.5% m/m in January), driven mostly by eggs (-17.6% m/m) and meat (-1.3%
m/m). At the same time, prices for fruits jumped 2.2% m/m and vegetables rose
0.8% m/m.

Prices for housing and utilities slid 2.0% (vs. a 1.7%
m/m rise in January) due to a plunge in natural gas prices by 12.9% m/m. In
addition, prices for clothing and footwear decreased 4.3% m/m (after a 5.6% m/m
drop in January). The decline was offset by growing prices for alcohol and
tobacco (0.8% m/m). In addition, prices for health care climbed 0.5% m/m.

Evgeniya Akhtyrko: The
seasonal price decline for eggs and meat outweighed the seasonal increase in
prices for foods and vegetables, resulting in dropping prices for food overall.
The reduced volatility in prices for fruits and vegetables is a positive
development that might indicate a more balanced supply and demand for these
items at the market.

A plunge in natural gas prices for households also
contributed greatly to February’s deflation. The continuing decline in prices
for clothing and footwear is likely related to the recent drop in demand for
outerwear caused by the recent abnormally warm weather.

Given February’s results, we are adjusting our
forecast of consumer inflation to 3.3% YTD in 2020 (vs. 4.1% YTD in 2019).