Page 21 - UKRRptJul21

4.2 Inflation
Inflation in May increased by 9.5% in annual terms, up from 8.4% in April,
the State Statistics Service reports. This is almost double last year’s inflation rate of 5%. Last month, the biggest yoy increases were: natural gas +162%; sunflower oil +75%; and sugar +67%. The biggest drops were: vegetables -13%; shoes - 4%; and clothes -3.6%.
Inflation will slow down this fall and hit the central bank’s target of 5% in first half of next year, Kyrylo Shevchenko, the bank’s governor, predicted yesterday. He said: “Inflation will start to slow down in the autumn of this year and will return to the target of 5% in the first half of 2022.”
4.2.1 CPI dynamics
Annual inflation in Ukraine reached 9.5% year on year in May, accelerating from 8.4% y/y in April, the State Statistics Service reported on June 9. Ukraine’s consumer prices jumped 1.3% month on month in May after increasing 0.7% m/m in April.
The growth of food prices accelerated to 1.7% m/m in May from 1.2% m/m growth in April. Prices gained the most for fruits (14.5% m/m), vegetable oil (6.8% m/m) and meat (1.8% m/m). At the same time, prices for eggs plummeted 17.5% m/m and vegetable prices slid 0.5% m/m. Alcohol and tobacco added 0.7% m/m in May (vs. 0.9% m/m growth in April).
Prices for housing and utility services advanced 3.9% m/m (after adding 0.4% m/m in April), driven by a 14.6% m/m jump in prices for natural gas.
Prices for clothing and footwear dropped 0.6% m/m after increasing 0.9% m/m in April. Prices for transportation grew 0.7% m/m in May after rising 0.6% in April.
“Food prices remain the major driver of consumer inflation in Ukraine as they bring it to a two-year high. It looks like Ukrainian consumers are quite able to accommodate a new higher level of food prices driven by a protracted period of fast global food price rises.
“The tariffs for household natural gas, which were unleashed after being frozen during the cold season, also contributed to inflation heating up in May. Meanwhile, prices for clothing and footwear declined after a jump in previous months. A 1.2% monthly appreciation of the national currency was a likely factor of this decline, as it made imported items less pricey. Summer deflation amid an increased agricultural supply may help inflation cool. If it doesn’t happen, our current consumer inflation forecast of 8.0% YTD in 2021 will be too optimistic,” an analyst at the Kyiv-based Concorde Capital brokerage said in a research note.
21 UKRAINE Country Report July 2021 www.intellinews.com