Page 28 - UKRRptMay19

slid 0.6% m/m. Prices for housing and utilities rose 0.3% m/m, driven mostly by price hikes for water and sewage expenses (1.9% m/m). In addition, transportation prices rose 0.5% m/m.
Inflation will end this year at 6.3%, NBU governor Smoliy predicted. Last year’s inflation rate was 9.8%. In March, the year over year rate was 8.6%. Asked about the impact of Russia’s June 1 restrictions on exports to Ukraine, Smoliy told reporters: “I do not see that this can significantly affect prices in the current year."
Core inflation (the consumer basket excluding goods and services with the most volatile prices) accelerated to 1.2% m/m growth in March from 0.2% m/m in February. Annual core inflation stood at 7.6% y/y vs 7.8% y/y in February. Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital wrote in a note on April 10 that te monthly jump in prices for clothing and footwear in March is typical in Ukraine (9.6% m/m in March 2018), related to seasonal changes in wardrobe. However, this year’s jump turned out unexpectedly high considering the hryvnia's 1.1% appreciation in March should have offset rising prices for clothing and footwear in light of the high share of imports, she added. The annual inflation of 8.6% y/y exceeded the quarterly forecast by the National Bank of Ukraine (NBU) of 8.4% y/y. This fact, coupled with increased political risks related to the presidential elections, is likely to undermine the central bank's intention to lower its key policy rate from 18% at its monetary committee meeting on Apr. 24. Concorde forecasts Ukraine’s consumer inflation to slow to 6.7% YTD in 2019 (from 9.8% YTD in 2018).
The slowdown in consumer inflation in Ukraine in March to 8.6% in annual terms practically corresponds to the forecast published in National Bank's inflation report for January. As noted by the NBU, core inflation slowed down somewhat faster than expected, primarily due to the strengthening of the hryvnia exchange rate to the currencies of partner countries. The current dynamics of consumer inflation and its components indicates a further weakening of inflationary pressure, the report reads. Read also IMF keeps economic growth forecast for Ukraine in 2019 unchanged The National Bank promises to continue to direct its policy towards slowing the pace of price growth and achieving the medium-term inflation target at the level of 5% plus/minus 1 percentage point.
28 UKRAINE Country Report May 2019 www.intellinews.com