Ukraine consumer inflation speeds up to 6.1% in January

10 February 2021

Annual inflation in Ukraine sped up to 6.1% yoy in January from 5.0% yoy in December, the State Statistics Service reported on Feb. 9. Ukraine’s consumer prices jumped 1.3% m/m in January after increasing 0.9% m/m in December mostly due to growing prices for food, housing and utility services.


Food prices advanced 1.4% m/m in January (after increasing 1.7% m/m in December). Prices grew the most for eggs (15.4% m/m), vegetables (6.5% m/m), and sugar (3.6% m/m). Alcohol and tobacco added 1.0% m/m in January.


Housing and utility services jumped 6.0% m/m (after inching up 0.1% m/m in December). In particular, prices for electricity surged 36.6% m/m, prices for water supply advanced 10.9% m/m. Prices for transportation grew 1.0% m/m in December, mostly due to fuel and lubricants (+2.3% m/m).


At the same time, prices for clothing and footwear dropped 4.0% m/m (after falling 4.6% m/m in December).


Evgeniya Akhtyrko: As we expected, consumer inflation sped up further in January. Food prices are heated up by high consumer demand amid the fast growth of population’s income. The hike of the minimum wage to UAH 6,000 apparently served as an additional factor. Moreover, the disbalances in supply of some staple foods often result in their huge price fluctuations.


The surge in some utility prices contributed significantly to consumer inflation in January. In particular, the government cancelled the privileged electricity tariff for the first 100 kWh consumed by households per month.


Now, annual consumer inflation exceeds the upper bound of the central bank’s inflation target range of 4-6%. And we expect the consumer inflation to spiral up in the nearest months, going beyond 7% yoy. That said, the National Bank of Ukraine is likely to hike the key policy rate by up to 100 bps from current 6%.

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