Ukraine consumer prices drop 0.6% m/m in July

Ukraine’s consumer inflation declined 0.6% m/m in July
after dropping 0.5% m/m in June, due to price decreases for food, clothing and
footwear, communal services and transportation, the State Statistics Service
reported on Aug. 9. Annual inflation amounted to 9.1% yoy, slightly speeding up
from 9.0% yoy in June.

Food prices declined 0.7% m/m in July (vs. a 1.1% m/m
decline in June), driven by vegetables (-13.6% m/m), and milk (-0.3% m/m). At
the same time, prices for eggs jumped 15.2% m/m, prices for sugar increased
1.1%% m/m, and bread prices grew 0.7% m/m.

Prices for clothing and footwear continued to decline,
losing 4.5% m/m (after a 3.0% m/m decline in June). In addition, prices for
housing and communal services dropped 2.3% m/m (vs. 1.4% m/m decline in June)
driven by lower natural gas price for households (-10.4% m/m). On top of that,
prices for transportation slid 1.1% (vs. 0.3% m/m increase in June) due to a
decline of prices for gasoline.

The price decline was restrained by a 1.1% m/m growth
of prices for alcohol and tobacco. In addition, prices for restaurants and
hotels also increased a 1.1% m/m.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) declined 0.1% m/m in July (vs. 0%
m/m in June). Annual core inflation stayed unchanged at 7.4% yoy.

Evgeniya Akhtyrko: The seasonal
deflation in July was in line with our predictions
mostly driven by the same factors as in June. A 2.9% appreciation of the
national currency fostered price decline for clothing and footwear as well as
gasoline, making imported goods less expensive.

We expect the deflation of consumer prices to
continue in August, driven mostly by an enlarged food supply. According to our
forecast, consumer prices will increase 7.2% YTD in 2019 (vs. 9.8% YTD in
2018).