Ukraine CPI increases 1.0% m/m in March

Ukraine’s consumer prices increased 1.0% m/m (+20.9% yoy) in March compared to -0.4% m/m (+32.7% yoy) in the prior month, according to an UkrStat release on April 8. The main factors were an upsurge in prices for clothing and footwear (+10.7% m/m vs. -2.0% m/m in February) and a stronger utility rate increase (+2.9% m/m vs. +0.3% m/m). At the same time, food prices continued falling (-0.7% m/m) during the month.  

Alexander Paraschiy: Consumer prices resumed growth in March in line with our estimates, stimulated by hryvnia devaluation in February, as well as a 25.2% m/m increase in electricity rates. Yet the further declines in food prices were unexpected. On the one hand, Russia’s embargo on Ukrainian food should have depressed their prices, but this pressure should have also been offset by recovering soft commodity prices at the global market. Though March inflation was close to our estimates, we are revising our CPI forecast for the year because the initially scheduled increase in natural gas prices in April was cancelled, which means that inflation will be lower. We expect CPI at 7.5% YTD (13.2% yoy) in 2016 compared to 9.5% YTD (16.2% yoy) that we estimated previously.