Ukraine’s Headline Inflation at 8.6% YoY after March Data

15 Апреля 2019

Ukraine’s State Statistics Committee (UkrStat) reported that rolling 12-month consumer inflation slowed to 8.6% YoY in March from 8.8% in February and from 9.2% YoY in January, according to official data released on Apr 9. UkrStat said that CPI inflation during the month of March alone was 0.9% MoM compared to 0.5% MoM for February. For 3M19 (a slightly different measurement of full-year inflation than the 12-month rolling figure) the CPI index growth was 8.9% YoY.

The main issue going forward in terms of inflation is whether the expected turnover in political power in Ukraine will affect the stability of the hryvnia; however, up to now the currency markets have remained quite calm in the face of the likely defeat of President Poroshenko by untested political newcomer Vladimir Zelenskiy in next weekend’s presidential election. In the latest numbers, we see a continuation of the general trend for slowing consumer inflation. However, the headline inflation figure of 8.6% remains somewhat higher than targets set by the National Bank and the government. For example, it was unexpected for us to see that prices for clothing jumped by 11.3% MoM in March according to official statistics. Additional pressure on the CPI index came from a price increase for bread by 0.9% MoM. Meanwhile the utility sector prices ticked up by a rather moderate 0.3% MoM, bringing their yearly growth to 13.2% after a one-time hike in natural gas prices for households by 22.9% last year.
The actual inflation figures for March (both headline and MoM) were higher than our forecasts of 0.2% MoM and 8.3% YoY for the month. Nevertheless, we are sticking with the trend line in the CPI index and now expect that the CPI will decline by 0.2% MoM in April, which would imply a slowdown in 12-month “headline” inflation from 8.6% to 8.1%.

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