Ukraine consumer inflation slows to 9.8% in 2018

Ukraine’s consumer inflation slowed to 0.8% m/m growth
in December from from 1.4% m/m in November, mostly owing to declining prices
for clothing, footwear and transportation, the State Statistics Service
reported on Jan. 9.

Annual inflation slowed to 9.8% yoy from 10.0% yoy in
November (and 13.7% in 2017).

Prices for clothing and footwear dropped 2.5% m/m in
December (vs. a 0.6% m/m decline in November), while transportation prices declined
1.6% due to lower prices for gasoline.

Food prices grew 1.8% m/m in December (vs. 1.3% m/m
growth in November), driven by vegetables (16.5% m/m) and milk (3.2% m/m). At
the same time, prices for eggs fell 1.1% m/m and sugar slid 1.0% m/m. In addition,
prices for fruits continued to decline, losing 0.6% m/m. Prices for housing and
utility services rose 0.7% m/m, slowing from November’s surge of 6.1% m/m.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) slowed to 0.6% m/m growth in
December from 1.1% m/m in November. Annual core inflation slowed to 8.7% yoy.

Evgeniya Akhtyrko: The
appreciation of the national currency by 0.7% in November and by 0.5% in
December fostered the decline of prices for items with a high share of imports,
namely clothing, footwear and gasoline. Ultimately, lower-than-expected CPI in
December helped to restrain 2018 consumer inflation to the eye-pleasing,
single-digit level of 9.8% yoy (vs. 10.1% yoy expected by Ukraine’s central
bank).

We expect Ukraine’s consumer inflation will slow
further, to 6.7% yoy growth, in 2019.