Ukraine consumer prices rise 13.7% in 2017

Ukraine’s consumer prices rose 1.0% m/m in December, slightly
boosting from 0.9% m/m growth (13.6% yoy) in the prior month, the State
Statistics Service reported on Jan. 9. In 2017, Ukraine’s consumer inflation
amounted to 13.7% YTD.

Like in November, prices for food (1.5% m/m growth) and
transport (1.8% m/m) were the major drivers of December’s consumer inflation
(CPI). Other important CPI components eased: prices for clothing and footwear
declined a further 2.4% m/m (0.7% m/m decrease in November) while the rise in
utilities prices slowed down to 0.3% m/m (0.8% m/m growth in November).

Evgeniya Akhtyrko: The rise of
the central bank’s (NBU) key policy rate by 1 pp in October and December
notwithstanding, the yearly inflation went far beyond the NBU’s latest
inflation forecast of 12.2% YTD as well as its inflation target range of 6%-10%
YTD.

For 2018, we expect inflation to ease from the
previous year, mostly due to lower food inflation from mid-year. We expect
consumer prices to stay elevated at least through the first half of 2018,
slowing down afterwards. We keep our 2018 CPI forecast in Ukraine at 8.9% YTD
growth (11.4% yoy).