Ukraine CPI grows 24.9% in 2014
12 January 2015
Ukraine’s consumer prices increased 24.9% YTD (average 12.1% yoy) in 2014 compared to a 0.5% YTD (0.3% yoy) decline in 2013, according to state statistics released on Jan. 6. An upsurge in food prices (+12.2% yoy vs. -2.2% yoy in 2013) was the main reason for the outcome since they occupy 50.7% of CPI. Prices for transportation (+24.5% yoy vs. +2.0% yoy), healthcare (+16.3% yoy vs. +2.3% yoy), and utilities (+16.2% yoy vs. +0.3% yoy in 2013) also contributed to the increase. At the same time, education prices were almost flat at +3.2% yoy vs. +3.4% yoy in 2013.
Alexander Paraschiy: Hryvnia devaluation was the main driver of inflation in 2014. Unfortunately, the new wave of weakening that started in November will trigger consumer price inflation at least at the start of 2015. Further inflationary prospects remain unclear since the hryvnia’s future hangs on a revision of the 2015 budget and, subsequently, results of IMF negotiations.
Under the assumption that austerity measures are implemented and IMF funding is secured, we project CPI slowing down to 15.2% yoy (5.7% YTD) in 2015. Despite the Cabinet’s reluctance to cut budget spending, there is still a chance that austerity measures will be implemented after talks with the IMF, whose delegation will be working in Ukraine until late January
