Ukraine consumer prices rise 0.9% in November

Ukraine’s consumer prices rose 0.9% m/m (13.6% yoy) in
November, slowing from 1.2% m/m growth (14.6% yoy) in the prior month, the
State Statistics Service reported on Dec. 8. Prices for food (0.9% m/m growth)
and transport (2.0% m/m) were responsible for two-thirds of the CPI increase.
Core CPI components eased except for utilities, which sped up to 0.8% m/m
growth from 0.5% m/m in the prior month. Prices for clothing and footwear
dropped 0.7% m/m vs. 2.4% m/m growth in the prior month.

In 11M17, CPI increased 12.5% YTD.

Alexander Paraschiy: For the
second time this year, the inflation trend has exceeded the National Bank’s
target. Recall, strong September inflation prompted the NBU to revise its inflation forecast
to 12.2% YTD from 9.1% YTD estimated at the year’s start. Now we already have
12.5% CPI growth for 11M17, which will end up at 13.0% YTD by December in the
best case scenario. Against this backdrop, we see a high likelihood for a
policy rate increase of 0.5-1.0pp to 14.0%-14.5% at the Dec. 14 NBU board
meeting.

For 2018, we expect inflation will ease from this
year but not as steeply as we projected initially, given this current inflation
spiral. So we expect 8.9% YTD CPI growth (11.4 yoy) vs. 6.6% YTD growth (8.3%
yoy) that we estimated previously.