Ukraine consumer prices jump 1.9% m/m in September

Ukraine’s consumer prices jumped 1.9% m/m in
September, mostly owing to clothing and food, the State Statistics Service
reported on Oct. 9. Annual inflation slowed down to 8.9% yoy from 9.0% yoy in
August.

Clothing and footwear prices surged 8.6% m/m (after a
2.6% m/m decline in August), mostly due to the more expensive items in the
colder autumn season. A 6.4% depreciation of the national currency during
August-September also added to clothing price growth due to the high share of
imports in this goods category.

Food prices grew 1.6% m/m (after a 0.6% m/m decline in
August), mostly due to a seasonal increase in the prices for eggs (14.1% m/m),
bread (3.3% yoy), meats (2.8% m/m), and milk (2.7% yoy). At the same time,
prices for fruits and vegetables continued to decline, falling by 2.9% m/m and
1.5% yoy, respectively.

In addition, prices for transportation added 2.8% m/m
(after a 1.5% m/m rise in August), mostly due to a fuel price surge. Prices in
education swelled 10.0% m/m with the beginning of the school year.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) also jumped 1.9% m/m in September,
accelerating from 0.1 m/m growth in August. Annual core inflation stayed
unchanged at 8.7% yoy.

Evgeniya Akhtyrko: The
September surge might cause consumer inflation to exceed the National Bank’s
forecast of 8.9% yoy, given the expected price increase for housing and
utilities in October-November and continuing food price growth. This inflation
trend, combined with the lack of full certainty on IMF financing, will likely
prompt the NBU to resort to another hike of its key policy rate at its Oct. 25
meeting.

Our current projection of 2018 consumer inflation
coincides with the NBU’s forecast of 8.9% yoy.