Ukraine’s consumer inflation declined 0.6% m/m in July after dropping 0.5% m/m in June, due to price decreases for food, clothing and footwear, communal services and transportation, the State Statistics Service reported on August 9. Ukraine’s annual inflation stood at 9.1% y/y, slightly speeding up from 9.0% y/y in June.
Food prices declined 0.7% m/m in July (vs. a 1.1% m/m decline in June), driven by vegetables (-13.6% m/m), and milk (-0.3% m/m). At the same time, prices for eggs jumped 15.2% m/m, prices for sugar increased 1.1%% m/m, and bread prices grew 0.7% m/m.
Prices for clothing and footwear continued to decline, losing 4.5% m/m (after a 3.0% m/m decline in June). In addition, prices for housing and communal services dropped 2.3% m/m (vs. a 1.4% m/m decline in June) driven by lower natural gas prices for households (-10.4% m/m). On top of that, prices for transportation slid 1.1% (vs. 0.3% m/m increase in June) due to a decline of prices for gasoline.
The price decline was restrained by a 1.1% m/m growth of prices for alcohol and tobacco. In addition, prices for restaurants and hotels also increased by 1.1% m/m.
Core inflation (the consumer basket excluding goods and services with the most volatile prices) declined 0.1% m/m in July (vs. 0% m/m in June). Annual core inflation stayed unchanged at 7.4% y/y.
“The seasonal deflation in July was in line with our predictions mostly driven by the same factors as in June. A 2.9% appreciation of the national currency fostered price decline for clothing and footwear as well as gasoline, making imported goods less expensive,” Evgeniya Akhtyrko of Concorde Capital said in a note. “We expect the deflation of consumer prices to continue in August, driven mostly by an enlarged food supply. According to our forecast, consumer prices will increase 7.2% YTD in 2019 (vs. 9.8% YTD in 2018).”