Ukraine reports 0.3% m/m deflation in August

Ukraine reports 0.3% m/m deflation in August
Annual inflation stood at 8.8% year-on-year in August following 9.1% y/y in July.
By bne IntelliNews September 11, 2019

Ukraine’s consumer inflation declined by 0.3% month-on-month in August due to dropping prices for food, clothing and footwear, utilities and maintenance, and transportation, according to the nation's state statistics service Ukrstat.

Consumer prices declined by 0.6% m/m in July. Annual inflation stood at 8.8% year-on-year in August following 9.1% y/y in July.

Food prices slid by 0.3% m/m in August (vs. a 0.7% m/m decline in July), driven by vegetables (-9.0% m/m), fruits (-8.4% m/m) and sugar (-2.0% m/m). At the same time, prices for eggs jumped by 39.2% m/m, meat inched up 1% m/m, and bread grew by 0.6% m/m.

Prices for clothing and footwear continued to decline, losing 2.8% m/m (after a 4.5% m/m decline in July). In addition, prices for utilities and house maintenance dropped by 0.9% m/m (vs. 2.8% m/m decline in July) driven by lower natural gas prices for households (-4.5% m/m).

On top of that, prices for transportation slid by 0.6% (vs. a 1.1% m/m decline in July) due to declining prices for gasoline.

The price decline was offset by a 0.8% m/m growth of prices for alcohol and tobacco. In addition, prices for restaurants and hotels also increased by 0.6% m/m.

Core inflation (the consumer basket excluding goods and services with the most volatile prices) declined by 0.1% m/m in August, the same as in July. Annual core inflation stood at7.2% y/y following 7.4% y/y in July.

Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital believes that the factor a 2% appreciation of the national currency fostered declining prices for clothing and footwear, as well as gasoline, making imported goods less expensive.

"We expect to see positive m/m inflation in September, driven mostly by seasonal price growth for food. In addition, traditional growth of service prices in September will also contribute to inflation," she added in a note on September 10.

Concorde forecasts that consumer prices will increase 6.7% YTD in 2019 (vs. 9.8% YTD in 2018).