Page 16 - UKRRptAug19

4.2 Inflation 4.2.1 CPI dynamics
Consumer prices in Ukraine declined 0.5% in June after having risen 0.7% in May. Last June, prices were flat. This brings y/y inflation down to 9.0% in June, from 9.6% in May. Meanwhile, core inflation (adjusted for regulated tariffs, fruits, vegetables, and fuel) was zero, the same as last year. Therefore, the core y/y figure stayed at 7.4% in June and May. Prices of food (down 1.1% m/m), clothes and footwear (down 3.0%) and utilities (down 1.4%) dragged the headline figure down in June. Among food items, the prices of vegetables and eggs dropped the most, posting 14.3% and 26.7% m/m deflation, respectively. The m/m deflation in vegetable prices was mostly due to a seasonal price decline following the harvest. Lower utilities prices were solely driven by lower natural gas tariffs (down 6.4%). We expect full-year inflation to slow to 8.0% this year, which is higher than the NBU's target range of 4-6% and its forecast of 6.3%. Anton Stroutchenevski, Rodion Lomivorotov, Artem Vinogradov
16 UKRAINE Country Report August 2019 www.intellinews.com