Ukraine inflation slows to 2.3% yoy in September as food prices drop

Ukraine’s consumer inflation slowed to 2.3 % yoy in
September from 2.5% yoy in the prior month, the State Statistics Service
reported on Oct. 9. Consumer prices grew 0.5% m/m in September (vs. a 0.2% m/m
decline in August).

Food prices slid 0.6% m/m in September (after
declining 1.5% m/m in August). In particular, prices declined for vegetables
(-7.0% m/m) and fruits (-8.9% m/m). At the same time, prices for eggs jumped
7.3% m/m, and for sugar inched up 1.6% m/m.

Prices for clothing and footwear jumped 7.9% m/m
(after falling 3.0% m/m in August). Prices for housing and utilities advanced
3.7% m/m (vs. a 15.7% m/m surge in August) due to a leap in natural gas prices
by 18.4% m/m. Prices for transportation climbed another 0.5% m/m, being driven
by increasing prices for fuel. On top of that, prices for education surged
11.0% m/m.

Evgeniya Akhtyrko: The
abundant supply of domestic fruits and vegetables drove the food component of
inflation downward in helping to eke out relatively low inflation in September.
Meanwhile, a significant jump in prices for clothing and footwear was likely
the result of a seasonal collection change for more expensive warm outerwear,
as well as 1.6% monthly hryvnia depreciation that resulted in price growth for
imported items.

We expect consumer inflation will accelerate in the
last quarter of the year amid renewed inflation for food prices. We expect
consumer inflation to land at 4.8% YTD in 2020 (vs. 4.1% YTD in 2019).