Ukraine’s Headline Inflation Flat Near 13% in April

May 14, 2018

Ukraine’s State Statistics Committee reported that rolling 12-month consumer inflation stood at 13.1% YoY in April, which was little-changed from March’s CPI inflation of 13.2% YoY. On a month-on-month basis the CPI increased by 0.8% in April, meaning that headline inflation inched down due to a comparison base change rather than an actual decline in consumer prices. UkrStat also reported that the CPI was at 13.6% YoY for the aggregate period of 4M18.

Ukraine’s consumer price index continues to perform more or less in line with our expectations, while remaining higher than the government’s target of 9.0% for this year.
In the individual CPI basket components, the highest price growth was registered in shell eggs (+93% YoY) and garbage disposal services (+41.6% YoY). A decline was observed only in sugar prices (-17.8% YoY). The weakness in sugar prices has had a negative impact on Ukraine’s top sugar producer Astarta (AST), with the stock having dropped by 12% YtD amid an overall positive trend in Ukrainian agro stocks.     
A possible increase in the natural gas heating price for households is a big uncertainty for this year’s inflation level; in case the government links the household gas price to import parity, then overall utility prices could rise by 20% by the end of the year.
Market-determined gas pricing is one of the conditions Ukraine must meet to qualify for its next IMF loan disbursement, but the government has vowed not to raise prices for households for political reasons, leaving the IMF loan in suspension.  

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