Ukraine CPI increases 3.1% m/m in January

Ukraine’s consumer prices grew 3.1% m/m (28.5% yoy) in January compared to 3.0% m/m (24.9% yoy) growth in December, according to state statistics released on Feb. 7. Food prices sped up to 4.7% m/m compared to 4.0% m/m in the previous month, in addition to accelerated prices for healthcare (3.0% m/m vs. 2.7% m/m in December) and education (2.5% m/m vs. 0.1% m/m in December). At the same time, growth in transportation rates slowed (1.2% m/m vs. 2.8% m/m at the prior month), as well as utilities (0.5% m/m vs. 1.3% m/m).

Alexander Paraschiy: The main reason for rising inflation has been the hryvnia’s decline, which has increased production costs (for energy-intense goods) and transportation costs. Further inflation is inevitable given that the hryvnia continued to plunge as of Feb. 6, losing 21% of its value to UAH 25.4/USD from UAH 20/USD a week before). Assuming the hryvnia does not drop further, we expect CPI will grow 22.8% yoy (14.0% YTD) in 2015. Further devaluation by the end of 2015, which is very likely, will push inflation even higher.