Ukraine consumer prices slow to 1.2% m/m growth in October

Ukraine’s consumer prices slowed to 1.2% m/m growth (14.6%
yoy) in October from 2.0% m/m (16.4% yoy) in the prior month, the State
Statistics Service reported on Nov. 8. The main sources of inflation are prices
for food (1.1% m/m), transportation (2.4% m/m), clothing and footwear (2.4%
m/m), and alcohol and tobacco (1.3% m/m). Price growth for all core CPI
components slowed except for transportation (2.4% m/m from 1.5% m/m in
September), healthcare (1.0% m/m vs. 0.5% m/m) and utilities (0.5% m/m vs. 0.4%
m/m).

In 10M17, Ukraine’s CPI grew 11.5% YTD.

Alexander Paraschiy: Inflation eased but much less than our expectation of October CPI
falling below 1% m/m. The high October inflation means that the central bank’s CPI forecast of 12.2% for 2017 is too optimistic. To not exceed this annual
level, CPI needs to slow sharply to 0.3% m/m growth in November-December, which
is highly unlikely. So far, we are keeping our 2017 CPI forecast unchanged at
12.6% YTD with near 0.5% m/m monthly inflation in the last two months of the
year. However, we should be ready to see CPI close to the 13% YTD mark by
December. October’s high CPI promises further monetary tightening in Ukraine in
the coming months, with a possible upward revision of the central bank’s key
rate by up to another 1pp in December as inflation is above its projected
trajectory.