Ukraine inflation accelerates to 2.8% m/m in October

Ukraine’s consumer prices increased 2.8% m/m (+12.4% yoy, +9.4% YTD) in October owing to rising costs of utilities, clothing, footwear and food, the State Statistics Service reported on Nov. 8. Prices rose 1.8% m/m and 7.9% YTD in October.  

Utility rates rose 7.5% m/m in October on the back of a 42.7% m/m surge in heating rates, a 2.5% m/m increase in clothing and footwear prices and a 1.8% rise in food prices.   

Alexander Paraschiy: Though the headline inflation perfectly fit our October estimate, the drivers were not what we expected. Heating rates that doubled since July were supposed to have shown up in the October heating bills and in turn, should have inflated utility rates by nearly 20% overall. In reality, October heating rates increased much lower than we expected, which means that a major part of the new heating costs will be reflected in the November statistics. 

October food prices rose stronger than we predicted. Coupled with further utilities growth in November, 2016 inflation might be higher than we initially expected. Given that we experienced incredible volatility in all economic parameters this year, we are sticking to our projection of CPI at 10.5% YTD and 14.5% yoy for 2016. But we should be ready for year-end CPI exceeding those numbers.