Ukraine’s central bank expects inflation to speed up to 19% by end of 2014.

By bne IntelliNews September 21, 2014

The inflation is expected to grow by 19% by the end of 2014, the press service of the National Bank of Ukraine (NBU) has announced. The reduction of the exchange rate, the growth of administratively regulated prices and tariffs as a result of urgent economic reforms, as well as the worsening of market expectations, have influenced the price dynamics, the central bank said. In 2015, the government forecasts inflation will slow down to 8.7%-9.8% y/y.

In August, the CPI inflation in Ukraine accelerated to 14.2% y/y compared to 12.6% y/y inflation seen in July, the State Statistics Service has announced. In m/m terms, consumer prices rose by 0.8%. In August, prices for foodstuffs and soft drinks fell by 0.1% m/m, for clothes and footwear fell by 0.8% m/m, for housing municipal services rose by 1.6% m/m, for health care services rose by 1.5% m/m; and for education services rose by 0.1% m/m. In Jan-Aug, the inflation was 12.9%.

The National Bank of Ukraine has decided to raise the discount rate from 9.5% to 12.5%, effective July 17, the NBU press service has informed. The NBU notes that the difficult macroeconomic situation, the weakening of the hryvnia and reforms planned by the government pose risks to price stability. Thus in order to curb inflation and keep the monetary market balanced, the National Bank's board believes it necessary to take steps to raise the domestic value of the national currency through the use of interest rate policy levers. This step, along with other stabilization measures, will help make bank deposits more attractive and positively influence Ukraine's forex market, the NBU said.

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