Ukraine’s consumer prices increased 0.6% month on month in December after jumping 0.8% m/m in November, mostly due to increases in prices for food, the State Statistics Service reported on January 10.
Annual inflation slowed to 10.0% year on year from 10.3% y/y in November (and sped up from 5.0% in 2020).
Food prices advanced 1.2% m/m in December (after increasing 1.1% m/m in November). Prices grew the most for eggs (10.0% m/m), vegetables (9.1% m/m) and milk (3.0%). At the same time, prices declined for fruits (-3.9% m/m), sugar (-2.1% m/m) and sunflower oil (-1.4% m/m). Prices for alcohol and tobacco added 0.2% m/m in December.
Prices for clothing and footwear dropped 3.6% m/m (after falling 2.1% m/m in November). Prices for housing slid 0.1% m/m amid a 0.7% m/m decline for natural gas prices. In addition, prices for transportation dropped 0.2% (after picking up 1.2% m/m in November), as the decline of prices for fuel and lubricants (-3.0% m/m) outweighed the higher passenger fares (1.1% m/m).
The decline of prices for clothing, housing and transportation helped to moderate inflation in December. However, food inflation shows no signs of calming down, as consumer demand stays high.
Importantly, the deflation of some consumer basket items in December was momentary. The decline in tariffs for households’ natural gas was the result of governmental regulatory tricks, while the drop in fuel prices followed the temporary price decline for oil on global markets.
Analysts at Concorde Capital don’t expect consumer inflation to enter the National Bank’s inflation target range of 4-6% y/y by the end of this year. High consumer demand, coupled with the slow correction of global commodity prices, will keep inflation in a stubbornly self-sustaining mode. In 2022, consumer inflation will reach 7.5% YTD, they forecast.