Ukraine consumer prices stay flat m/m in August

Ukraine’s consumer prices remained flat m/m in August
as annual inflation slightly accelerated to 9.0% yoy growth (from 8.9% yoy in
July), the State Statistics Service reported on Aug. 10. Cooling prices for
food and clothing were offset by growing prices for transportation and
utilities.

Food prices declined 0.6% m/m (after a 1.9% m/m
decrease in July), mostly due to a seasonal drop in prices for fruits (-6.2%
m/m) and vegetables (-10.5% m/m). At the same time, prices for eggs jumped 6.0%
m/m after plunging during the previous months. Clothing and footwear prices
slid 2.6% m/m (after a 4.6% m/m drop in July).

Other consumer prices grew, led by transportation,
which added 1.5% m/m in August (after 0.7% m/m growth in July). Prices for alcohol
and tobacco increased 0.9% m/m (after 1.9% m/m growth in July). Housing and
utility prices climbed 0.5% m/m, while prices for household durables inched up
0.3%.

Core inflation (the consumer basket excluding goods
and services with the most volatile prices) inched up 0.1% m/m in August, after
sliding 0.1 m/m in July. Annual core inflation slowed to 8.7% yoy growth from
8.8% yoy in the previous month.

Evgeniya Akhtyrko: Summer
disinflation provided a sufficient “safety cushion” to get through the rest of
the year, when we expect consumer prices to swell again due to higher utility
bills (especially natural gas and heating prices) and a seasonal decrease in
food supply.

Given August consumer inflation of 3.6% YTD, our
projection of 8.9% yoy for 2018 looks attainable amid slowing core inflation,
coupled with the central bank’s tight monetary policy.