Ukraine CPI slides 0.4% yoy in May

Ukraine’s consumer prices in May inched up 0.1% m/m but still stayed in the red on a yoy basis at -0.4%, according to state statistics released on June 6. Falling food prices (-2.3% yoy) remain the key factor. Other key CPI components keep growing: education +3.7% yoy, health care +1.7% yoy, transportation +0.3% yoy and utilities +0.3% yoy.

Alexander Paraschiy: The deflationary trend is still being sustained. It is very strange to see continued price declines in Ukraine against the backdrop of fast-growing CPI in neighboring countries such as Poland, Russia, Turkey and Belarus. Yet we do not have alternative price metrics to State Statistics Service figures. In this context, we need to address a deflationary trend that is likely to be sustained in view of an expectedly good grain harvest. What’s more, we anticipate flat natural gas tariffs given that IMF negotiations are effectively stalled. Thus, we keep our CPI forecast at +0.8% yoy in 2013.