Ukraine inflation speeds up to 1.3% m/m growth in May

Ukraine’s consumer price index (CPI) sped up in May to 1.3% m/m growth (13.5% yoy growth) owing to the rising cost of food, the State Statistics Service reported on June 8. In the prior month, CPI grew 0.9% m/m, or 12.2% yoy. Food prices sped up to 2.3% m/m from 1.2% m/m in April on the back of a surge in prices for vegetables (16.7% m/m), fruits (12.8% m/m) and meat (2.9% m/m). 

Utilities also increased faster (0.8% m/m growth vs. 0.5% m/m in April) owing to higher prices for water supply (8.0% m/m) and sewage (5.3% m/m). Healthcare prices also sped up to 0.7% m/m growth from 0.5% m/m in April. Transportation prices eased to 0.5% m/m growth (from 0.9% m/m in April) and prices for clothing and footwear dropped 1.0% m/m (compared to 0.9% m/m growth in April). Education prices remained almost unchanged at 0.1% m/m growth from no change in April.

Alexander Paraschiy: Inflation in May was stronger than expected as much colder temperatures pushed prices higher for fruits and vegetables, translating into almost doubled growth in the food price index.

Still, this surprise does not change our general view on inflation tendencies. We expect food prices substantially easing already in June, with the downward trend sustaining itself unless there’s dramatic weather in the summer. Against this backdrop, we are keeping our 2017 consumer inflation forecast unchanged at 9.0% YTD growth, or 12.4% yoy.