Ukraine consumer prices increase 1% m/m in January

11 February 2019

Ukraine’s consumer prices increased 1.0% m/m in January, driven mostly by food, housing and utility prices, the State Statistics Service reported on Feb. 8. Meanwhile, annual inflation slowed to 9.2% yoy from 9.8% yoy in December.


Prices for housing and utilities jumped 2.6% m/m, driven mostly by price hikes for heating and hot water (11.0% m/m) that were caused by previously increased residential  natural gas rates.


Food prices grew 2.1% m/m in January (vs. 1.8% m/m growth in December), driven by vegetables (16.6% m/m), fruits (4.7% m/m) and milk (1.6% m/m). At the same time, prices for eggs slid 0.5% m/m.


Amid the growth, accelerated price declines for clothing and footwear (-4.6% m/m in January vs. -2.6% m/m in December) and transportation (-1.7 % m/m in January vs. -1.6% m/m in December) served as restraining factors.


Core inflation (the consumer basket excluding goods and services with the most volatile prices) slowed to 0.3% m/m growth in January from 0.6% m/m in December. Annual core inflation slowed to 8.3% yoy.


Evgeniya Akhtyrko: January consumer inflation was in line with our expectations. The hryvnia's appreciation by 0.5% in December, and mostly stable exchange rate in January, fostered the decline of prices for items with a high share of imports, namely clothing, footwear and gasoline.


In addition, seasonal sales amid enlarged supply also contributed to plunging clothing and footwear prices. Meanwhile, growing demand for food during the holiday season amid tighter supplies caused fruit and vegetable prices to surge.


If January’s cooling annual inflation trend is maintained in February, the central bank is likely to cut its key policy rate by 0.5pp in March from 18.0% currently.


We expect Ukraine’s consumer inflation to slow to 6.7% YTD in 2019 (from 9.8% YTD in 2018).

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