In March, CPI inflation in Ukraine accelerated to 3.4% y/y compared to 1.2% y/y growth seen in February and 0.5% in January, the State Statistics Service has announced. In m/m terms, inflation in March accelerated to 2.2% versus 0.6% registered in February. In Q1, price growth quickened to 3% ytd.

Prices for food and non-alcoholic beverages on the consumer market in March rose by 2.4% m/m. The highest growth was seen in prices of eggs-21.3% m/m. Fruits prices increased by 11.8%, bananas-22.1%, apples-7.3%. Prices for sugar, rice increased by 10.4-5.4%. Prices for butter, sour cream, milk products, milk, cheese, fish and fish products, processed grain increased by 3.2%-1.0%. At the same time, meat products and sunflower oil registered decline in prices of 1.1% m/m.

Prices for alcoholic beverages and tobacco rose 0.7% m/m. Clothing and footwear prices rose by 6.1%, including clothing - by 5.9 %, footwear - by 6.4%. In the health sector, prices grew by 2.3% m/m, mainly due to a rise in price of pharmaceutical products by 3.3%. Higher prices for transport in general by 5.7% was due to higher prices for fuel oil and 11.2%, vehicles 8.7%, the cost of transportation by air transport by 8.6% and rail transport by 4.3%. Prices in the field of recreation and culture increased by 2.4% mainly due to the growth in cost of tourist services by 12.7 %. In addition, a 2.3% increase in prices for audio equipment, photographic and information processing equipment was seen.

The devaluation of national currency which led to increase in fuel prices are the main reasons for inflation accelerating in March. Also a lot of importers have yet to increase their prices. The further price adjustments can be expected in the near month, as gas prices will go up by around 50% in line with IMF demands.

Ukraine recorded CPI deflation of 0.3% y/y in 2013. Deflation of 0.2% was observed in 2012; inflation of 4.6% in 2011 and 9.1% in 2010.  

The NBU expects inflation of 12-16% in 2014, Head of the National Bank Stepan Kubiv said. According to him, the final inflation indicator this year will depend on efficiency of steps in reformation of economy, on rapidness of attraction of external resources by Ukraine, as well as on rapidness of restoration of inter-sector balances in economy. Another factor influencing on the inflation indicator called was the restoration of trust of business and citizens in the financial system.