Ukraine Headline Inflation Edges Up to 2.6% in October from 2.3% in September

November 16, 2020

Ukraine’s rolling 12-month “headline” consumer inflation edged up to 2.6% in October from 2.3% in September, according to State Statistics Committee data published last week. In October alone there was inflation of 1.0% MoM on the back of 1.1% MoM increase in the aggregate food price index.

It appears to us - not for the first time - that the government’s officially reported consumer inflation is underestimating the true inflation on the ground in Ukraine’s economy, and does not reflect the price increases that Ukrainians are seeing in grocery shops. We expect November to see higher inflation, as the global price for wheat rose 6.2% MoM to USD 205 per tonne in October. Prices for other soft commodities were also on the rise, a trend likely to lead to higher meat prices as well. Meanwhile, UkrStat reported that meat prices climbed by 0.8% MoM, and bread prices increased by 1.5% MoM in October.
On the currency front, the hryvnia was more or less stable in October, with the official exchange rate against the dollar moving by a moderate 0.5% from 28.31 UAH/USD to 28.44 UAH/USD over the period.
We continue to stick with our forecast that consumer inflation in Ukraine will accelerate in the coming months. Although the official CPI figure for 2020 is unlikely to exceed 5%, we do now expect that the next year’s inflation could easily reach into double digits.

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