Page 28 - UKRRptJune18

4.2 Inflation
Prices 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
CPI headline (%YoY, 16.6 22.3 12.3 9.1 4.6 -0.2 0.5 24.9 43.3 12.4 13.7 9.4 eop)
CPI headline (%YoY, 12.8 25.3 16 9.4 8 0.6 -0.3 12.1 48.5 14.9 14.5 9.2 average)
PPI (%YoY, eop) 23.2 21.1 15.3 18.8 17.4 0.4 1.7 31.8 25.4 35.7 16.5 9
PPI (%YoY, 20.5 33.6 7.4 21.4 19.9 6 -0.1 17 36.5 20.4 27.2 10.6 average)
Source: ICU, CEIC
4.2.1 CPI dynamics
The National Bank of Ukraine (NBU) confirmed the forecast for 2018 inflation at 8.9% in April . "According to the estimates of the National Bank, the deviation of the actual inflation in April from the forecast is insignificant and can be leveled out in the following months. In addition, the monetary conditions are still tough enough to ensure a gradual decline in consumer inflation in accordance with the forecast of the National Bank (8.9% year-on-year at the end of 2018) and its return to the target range in mid-2019," the NBU reported. According to the State Statistics Service, in April consumer inflation continued slowing down for the third consecutive month and amounted to 13.1% year-on-year (compared to 13.2% in March). Inflation in monthly terms decreased from 1.1% in March to 0.8% in April.
Ukraine’s consumer prices grew 0.8% month-on-month in April following a 1.1 m/m growth in March (13.1% year-on-year in April vs 13.2% y/y in March), according to the Ukrstat state statistics agency in Kyiv. In April, the National Bank of Ukraine (NBU) kept its key policy rate unchanged at 17% after four rate hikes, as "the current monetary conditions are sufficiently tight to bring inflation back to its mid-term target". The move followed the central bank's decision to increase its key policy rate by 1 percentage point (pp) to 17% from March 2. The International Monetary Fund (IMF) has reviewed downwards Ukraine's consumer price growth forecast for late 2018 by 2 percentage points to 9%. By late 2019, the IMF expects inflation in Ukraine at the level of 6.5%. Meanwhile, Ukraine's central bank believes that "headline inflation will decline and return to the regulator's target range in mid-2019" to make 5.8% by the end of the year. In 2018, inflation will decelerate gradually to 8.9% in December, albeit remaining above the target. In 2020, inflation will slow to 5.0%, thus hitting the central point of the target range (5.0% ± 1 percentage point). "On the one hand, the hryvnia appreciation in the first quarter will curb price growth, primarily for non-food goods, and will thus contribute to core inflation declining faster than forecasted in January," the regulator added.
28 UKRAINE Country Report June 2018 www.intellinews.com