Page 22 - UKRRptDec19

Ukraine’s successful cooperation with the IMF is the key assumption behind the NBU’s decision to accelerate the cut of key policy rate. The central bank expects the first IMF loan tranche to be received by the end of this year.
4.2.1​ CPI dynamics
Ukraine’s consumer prices rose 0.7% m/m in October owing to growing prices for food, clothing and footwear, and alcohol and tobacco, ​the State Statistics Service reported on November 8. Annual inflation slowed to 6.5% y/y in October from 7.5% y/y in September.
Food prices jumped 0.9% m/m in October (vs. 0.3% m/m growth in September), driven mostly by eggs (9.6% m/m), vegetables (4.6% m/m), and milk (2.6% m/m). At the same time, prices for sugar declined 2.3% m/m and fruits fell 0.6% m/m.
Prices for clothing and footwear rose 1.9% m/m (after an 8.7% m/m surge in September). In addition, prices for alcohol and tobacco jumped 0.8% m/m.
At the same time, prices for utilities and home maintenance dropped 0.4% m/m (after a 0.2% m/m decline in September), driven by lower natural gas prices for households (-4.3% m/m). In addition, transportation prices slid 0.7% (vs. a 0.4% m/m decline in August) due to falling prices for gasoline and railroad transit.
Core inflation (the consumer basket excluding goods and services with the most volatile prices) also rose 0.7% m/m in October (vs. a 1.2% m/m increase in September). Annual core inflation slowed to 5.8% y/y from 6.5% y/y in September.
“The drivers of consumer inflation in October were essentially the same as in September. The factor of food prices was reinforced amid a seasonal decline in supply of vegetables and eggs. The continuing decline in natural gas rates for households served as a major restraining factor helping to reach a substantial slowdown in year-on-year inflation,” Evgeniya Akhtyrko of Concorde Capital said in a note. “Due to a faster-than-expected inflation slowdown in October, we revise downward our forecast of CPI for 2019, anticipating it at 6.0% YTD in 2019 (vs. 9.8% YTD in 2018).
22​ UKRAINE Country Report​ December 201 ​ ​www.intellinews.com