Page 24 - UKRRptAug18

pressure on the NBU's management is likely to increase."
Specifically, there could be demands for greater NBU interference into FX and maintenance of fiscal expenditures through the purchase of government securities by the NBU (i.e. hryvnia emission), Akhtyrko believes.
"The NBU's independence in decision making is crucial for maintaining macroeconomic stability in the country," he added.
4.2.1 CPI dynamics
Ukraine’s inflation slowed in June on the back of falling food prices and dropped into single figures for the first time since October 2016 , the State Statistics Service reported on July 9.
Ukraine’s consumer prices remained flat m/m in June for the second month in a row, the State Statistics Service reported. Annual inflation slowed down to 9.9% y/y from 11.7% y/y in May. Like in the previous month, the disinflation was caused by a drop in prices for food and clothing.
Food prices dropped 0.5% m/m (after 0.7% m/m decline in May), mostly due to a seasonal decline in prices for eggs (-9.8% m/m), milk (-1.7% m/m), fruits (-2.1% m/m) and vegetables (-1.0% m/m). The decline in prices for clothing and footwear accelerated to 2.4% m/m (from 0.4% m/m decline in May).
Meanwhile, prices for alcohol and tobacco continued to rise, adding 1.6% m/m in June (after 1.8% m/m growth in May). Prices for transportation increased 0.6% m/m, like in the previous month. Utility prices climbed 0.3% m/m, while prices for household durables inched up 0.2%
Core inflation (the consumer basket excluding goods and services with the most volatile prices) was flat m/m in June, slowing from 0.2% m/m growth in May. Annual core inflation slowed to 9.0% y/y growth from 9.3% y/y in the previous month.
“We expected disinflation to continue after May amid declining food prices. However, plunging clothing prices have helped a lot in maintaining a flat trend in overall consumer prices amid creeping inflation in other consumer price index components,” Evgeniya Akhtyrko of Concorde Capital said in a note.
“Deteriorating weather conditions in the second half of June might result in lower harvests as early as this month, which could offset anticipated slowing in food price growth. CPI will increase 8.9% YTD, or 11.8% y/y in 2018, according to our projections,” Akhtyrko added.
24 UKRAINE Country Report August 2018 www.intellinews.com