Ukraine consumer prices stay flat m/m in May

Ukraine’s consumer prices remained flat m/m in May,
slowing annual inflation to 11.7% yoy (from 13.2% yoy in April), the State Statistics
Service reported on June 8. Prices for food and soft beverages dropped 0.7% m/m
(after 1.1% m/m growth in April), mostly due to a seasonal decline in prices
for eggs (-9.5% m/m), milk (-2.5% m/m), vegetables (-2.9% m/m) and fruits
(-1.1% m/m). Additionally, the seasonal change in apparel pushed down prices
for clothing and footwear, resulting in a monthly decline of 0.4% m/m (after
2.1% m/m growth in April).

Meanwhile, prices for alcohol and tobacco jumped 1.8%
m/m in May (after 1.5% m/m growth in April) as a consequence of excise duty
growth by 20-30% in the beginning of 2018. Prices for household durables and
transportation increased 0.6% m/m alike, while utility prices inched up 0.1%
m/m.

Core inflation (the consumer basket excluding goods and
services with the most volatile prices) slowed to 0.2% m/m growth from 0.6% m/m
growth in April, while annual core inflation slowed to 9.3% yoy growth from
9.4% yoy in the previous month.

Evgeniya Akhtyrko: The
significant deceleration of inflation in May amid increased supply of
agricultural produce was widely expected given very favorable weather
conditions in late April and May. The slowdown in core inflation also helped to
improve the result.

The disinflation process is very likely to continue
through the summer due to increased food supply amid an expected good harvest.
According to our projections, CPI will increase 8.9% YTD, or 11.8% yoy in 2018.