Ukraine inflation slows to 0.2% m/m growth in July

Ukraine’s consumer price index slowed to 0.2% m/m
growth in July (but still a 15.9% yoy surge) amid a sharp slowdown in food
prices, the State Statistics Service reported on August 8. In June, CPI grew
1.6% m/m (15.6% yoy).

Food price growth slowed to 0.3% m/m from 3.3% m/m in
the prior month owing to vegetables (-9.2% m/m), eggs (-9.0% m/m), and fruits
(-1.4% m/m). In the meantime, meat prices were on rise at 5.1% m/m growth.
Other accelerating sectors were utilities (0.6% m/m growth vs. 0.5% in June) and
healthcare (0.5% m/m and 0.5% in June). Education prices slowed to 0.1% m/m
growth (vs. 0.4% m/m in June). Transportation prices were unchanged m/m compared
to a 0.2% m/m drop in the prior month. Prices for clothing and footwear
deepened their decline to -4.4% m/m (vs. -2.5% m/m in June and -1.0% in May).

Alexander
Paraschiy: Inflation slowed, however
the deflation
anticipated by
the National Bank (NBU) did not come to reality. The NBU’s 2017 CPI forecast of
9.1% YTD growth is at risk. By July CPI already reached 8.2% YTD. To reach the
forecasted number, a near-zero monthly average inflation rate needs to be
sustained till the year end, which is an incredibly optimistic scenario. We predicted this development and
therefore we are keeping our 2017 CPI forecast unchanged at 11.8% YTD growth
(14.0% yoy).