Ukraine’s Headline Inflation Falls 0.6p.p. to 9.0% YoY in June

July 15, 2019
 

News
Ukraine’s State Statistics Committee (UkrStat) reported that rolling 12-month consumer inflation declined to 9.0% YoY in June from 9.6% in May, while in April the CPI headline rate was 8.8% YoY, according to official data released on Jul 9. UkrStat said that for the month of June alone, there was deflation of 0.5% MoM after inflation of 0.7% MoM for May. For 1H19 (a slightly different measurement of full-year inflation than the 12-month rolling figure) the CPI index growth was at 9.0% YoY.


Commentary
Moderate deflation in June is a historical seasonal pattern in Ukraine. Nonetheless, we had expected that the decline in rolling 12-month inflation would be larger than 0.6 p.p MoM. In the main consumer basket categories, the aggregate food prices decreased by 1.2% MoM in June while on the yearly comparison basis, food prices demonstrated growth of 8.8%. In the utility service sector, there was a drop in the natural gas price by 6.4% MoM in June as a result of lower prices for gas on European hubs. In fact, the European prices are at a historical low, thanks to competition between Russia and the US, and below the cost of transporting gas from the US to Europe.
The CPI report showing that inflation is more or less under control should encourage the National bank to lower its key interest rate from the current 17.50% to 17.00% at the coming policy meeting on Jul 18.      


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