Ukraine Sees Deflation of 0.6% MoM in July; Headline CPI Stays at 2.4%

July 14, 2020

Ukraine saw consumer deflation of 0.6% MoM in July after inflation of 0.2% and 0.3% MoM in June and May respectively. Rolling 12-month “headline” inflation stayed unchanged at 2.4% in July, according to State Statistics Committee data published last week.
On the industrial goods side, UkrStat’s aggregate Producer Price Index showed a year-on-year drop of 7.5% in July after the 4.6% decline seen in June; on a monthly basis, the PPI increased by 0.4%. In a broad industry breakdown, UkrStat estimated that energy prices fell by 17.5% YoY in July and prices for the intermediate goods decreased by 8.0% YoY, while prices in the consumer non-durables category rose by 7.4% YoY in July.

If there had not been a drop of 9.1% YoY in the housing, water, electricity, gas and fuel category, Ukraine’s consumer inflation would be much higher. Food prices grew by 3.6% YoY in July while healthcare services rose by 9.1% YoY. It is also quite surprising to see low inflation amid the 15% year-to-date hryvnia devaluation. However, the exchange rate factor did not have a significant impact on prices for medium-term consumer goods, as stores were well-stocked in previous periods. We expect inflation to accelerate in September according to the seasonal pattern, while the data for August might still indicate a slow CPI pace amid cheap agro products. The annual rate of consumer inflation continues to remain below the National Bank’s target range of 4-6%.
On the producer price side, UkrStat reported separately that Ukraine’s internal PPI fell by 9.0% while the PPI decline for Ukrainian exports was at 2.6% YoY in July. In the manufacturing sector, there was an estimated aggregate price increase of 1.3% YoY in July.


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