Ukraine consumer prices rise 0.9% m/m in March

10 April 2019

Ukraine’s consumer inflation accelerated to 0.9% m/m in March from 0.5% m/m in February, driven mostly by the growth of prices for clothing and footwear, the State Statistics Service reported on Apr. 9. Annual inflation slowed to 8.6% yoy from 8.9% yoy in February.


Clothing and footwear prices jumped 11.3% m/m after declining in the four previous months. Meanwhile, annual inflation for clothing and footwear was only 2.0% yoy.


Food prices grew 0.4% m/m in March (vs. 0.9% m/m growth in February), driven by vegetables (2.4% m/m), fruits (1.7% m/m) and bread (0.9% m/m). At the same time, egg prices dropped 5.0% m/m, and milk prices slid 0.6% m/m.


Prices for housing and utilities rose 0.3% m/m, driven mostly by price hikes for water and sewage expenses (1.9% m/m). In addition, transportation prices rose 0.5% m/m.


Core inflation (the consumer basket excluding goods and services with the most volatile prices) accelerated to 1.2% m/m growth in March from 0.2% m/m in February. Annual core inflation slowed to 7.6% yoy from 7.8% yoy in February.


Evgeniya Akhtyrko: The monthly jump in prices for clothing and footwear in March is typical in Ukraine (9.6% m/m in March 2018), related to seasonal changes in wardrobe. However, this year’s jump turned out unexpectedly high considering the hryvnia's 1.1% appreciation in March should have offset rising prices for clothing and footwear in light of the high share of imports.


The annual inflation of 8.6% yoy exceeded the quarterly forecast by the National Bank of Ukraine of 8.4% yoy. This fact, coupled with increased political risks related to the presidential elections, is likely to undermine the central bank's intention to lower its key policy rate from 18.0% at its monetary committee meeting on Apr. 24.


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

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