Ukraine consumer prices rise 0.7% in October

Ukraine’s consumer prices rose 0.7% m/m in October
owing to growing prices for food, clothing and footwear, and alcohol and
tobacco, the State Statistics Service reported on Nov. 8. Annual inflation
slowed to 6.5% yoy in October from 7.5% yoy in September.

Food prices jumped 0.9% m/m in October (vs. 0.3% m/m
growth in September), driven mostly by eggs (9.6% m/m), vegetables (4.6% m/m),
and milk (2.6% m/m). At the same time, prices for sugar declined 2.3% m/m and
fruits fell 0.6% m/m.

Prices for clothing and footwear rose 1.9% m/m (after
an 8.7% m/m surge in September). In addition, prices for alcohol and tobacco
jumped 0.8% m/m.

At the same time, prices for utilities and home
maintenance dropped 0.4% m/m (after a 0.2% m/m decline in September), driven by
lower natural gas prices for households (-4.3% m/m). In addition,
transportation prices slid 0.7% (vs. a 0.4% m/m decline in August) due to
falling prices for gasoline and railroad transit.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) also rose 0.7% m/m in October (vs.
a 1.2% m/m increase in September). Annual core inflation slowed to 5.8% yoy
from 6.5% yoy in September.

Evgeniya Akhtyrko: The drivers
of consumer inflation in October were essentially the same as in September. The
factor of food prices was reinforced amid a seasonal decline in supply of
vegetables and eggs. The continuing decline in natural gas rates for households
served as a major restraining factor helping to reach a substantial slowdown in
year-on-year inflation.

Due to a faster-than-expected inflation slowdown in
October, we revise downward our forecast of CPI for 2019, anticipating it at 6.0%
YTD in 2019 (vs. 9.8% YTD in 2018).