Ukraine consumer prices slide 0.3% m/m in August

Ukraine’s consumer inflation slid 0.3% m/m in August
owing to dropping prices for food, clothing and footwear, utilities and
maintenance, and transportation, the State Statistics Service reported on Sept.
9. Consumer prices declined 0.6% m/m in July.

Annual inflation slowed to 8.8% yoy in August from
9.1% yoy in July.

Food prices slid 0.3% m/m in August (vs. a 0.7% m/m
decline in July), driven by vegetables (-9.0% m/m), fruits (-8.4% m/m) and sugar
(-2.0% m/m). At the same time, prices for eggs jumped 39.2% m/m, meat inched up
1.0% m/m, and bread grew 0.6% m/m.

Prices for clothing and footwear continued to decline,
losing 2.8% m/m (after a 4.5% m/m decline in July). In addition, prices for utilities
and house maintenance dropped 0.9% m/m (vs. 2.8% m/m decline in July) driven by
lower natural gas prices for households (-4.5% m/m). On top of that, prices for
transportation slid 0.6% (vs. a 1.1% m/m decline in July) due to declining
prices for gasoline.

The price decline was offset by 0.8% m/m growth of
prices for alcohol and tobacco. In addition, prices for restaurants and hotels
also increased 0.6% m/m.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) declined 0.1% m/m in August, the
same as in July. Annual core inflation slowed to 7.2% yoy from 7.4% yoy in
July.

Evgeniya Akhtyrko: The
seasonal deflation in August was in line with our forecast,
mostly driven by the same factors as in July. However, the factor of food price
decline diminished. A 2.0% appreciation of the national currency fostered
declining prices for clothing and footwear, as well as gasoline, making
imported goods less expensive.

We expect to see positive m/m inflation in
September, driven mostly by seasonal price growth for food. In addition,
traditional growth of service prices in September will also contribute to
inflation. We forecast that consumer prices will increase 6.7% YTD in 2019 (vs.
9.8% YTD in 2018).