Ukraine’s consumer prices remained flat in May comparing with April, while annual inflation stood at 11.7% year-on-year following 13.2% y/y in April, according to the Ukrstat state statistics service.

Prices for food and soft beverages dropped 0.7% month-on-month (after 1.1% m/m growth in April), mostly due to a seasonal decline in prices for eggs (-9.5% m/m), milk (-2.5% m/m), vegetables (-2.9% m/m) and fruits (-1.1% m/m).

At the top of that, the seasonal change in apparel pushed down prices for clothing and footwear, resulting in a monthly decline of 0.4% m/m (after 2.1% m/m growth in April).

Meanwhile, prices for alcohol and tobacco jumped 1.8% m/m in May (after 1.5% m/m growth in April) as a consequence of excise duty growth by 20-30% in the beginning of 2018. Prices for household durables and transportation increased 0.6% m/m alike, while utility prices inched up 0.1% m/m.

Core inflation stood at 0.2% m/m in May folloiwng a 0.6% m/m growth in April, while annual core inflation slowed to 9.3% y/y growth from 9.4% y/y in the previous month.

"The significant deceleration of inflation in May amid increased supply of agricultural produce was widely expected given very favorable weather conditions in late April and May," Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital wrote in a note on June 11.

The disinflation process is very likely to continue through the summer due to increased food supply amid an expected good harvest. According to Concorde's forecast, CPI will increase 8.9% YTD, or 11.8% y/y in 2018.