Food, gas and housing and utility services: as prices rise in 2017

2017 in Ukraine began with a sharp rise in price of certain goods and services. Most of all it was noticeable at certain foods, such as meat in supermarkets has risen by 10 – 30%. Spike in the prices of dairy products and vegetables. In some cities of Ukraine more expensive fare in the shuttles. All this is overlaid on utility bills with unusually large for Ukrainians sums, writes “Economic truth”.

In expert circles as the originator of the acceleration of inflationary processes was called “factor 3 200”. The flames threw the revision of the national Bank inflation forecast by 1% — from 8.1% to 9.1%. At the same time, the government and the NBU assured that everything is normal, no deviation of the projected macroeconomic forecast no. The valid range of the revision of the inflation rate to 8.1% ± 2%. In January the official rate of inflation was 1.1%.

Products will continue to go up

According to official statistics, prices for food and non-alcoholic beverages increased by 1.9%. Most — 14.9% — more expensive vegetables. Increased prices for fruit, milk, cream, fermented milk products, cheese, butter and beef. According to experts, the products will go up further. Analysts say the prices will rise faster than in 2016.

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In 2017, says chief economist at Dragon Capital Elena Belan, rising prices for food accelerated to 7% y/y compared with 3.3% in 2016. “The main factors — the recovery in domestic demand, including the increase in the minimum wage, the lack of additional offers some types of fruits and vegetables that originated in 2016 because of trade wars with Russia”, — said the expert. The limiting factor for the increase in food prices will be a good harvest of grain and other silskogospodarske.

“Another part of the inflation processes on the domestic market linked to improving conditions for Ukrainian business”, — said the chief economist of “Alfa-Bank Ukraine” Alexey Blinov. According to him, in recent months, the Ukrainian food market, a faster pace of rising prices of sugar and dairy products that have been quite stable. This is due to the improvement in the external economic environment. And the expansion of opportunities for exports and increase world prices for this commodity changes the balance of the internal market and leads to higher prices of goods, he said.

Public transportation

According to official data, transportation services increased by 4.1%. The greatest contribution made travel in road transport — the cost of tickets is increased by 4.5%.
First and foremost, we are talking about urban and suburban buses – for example, in Kiev up to 7-8 UAH. Played a role “factor 3200” – the carriers worked the logic: if people get more, they have to pay more. Second, in January began to rise in price of gasoline.


Passenger fares sensitive to the population moment. Deputy Prime Minister Pavlo Rozenko has considered the increase unreasonable and instructed the Ministry of Infrastructure and local authorities to take “tough response actions” against the increase of tariffs for transportations. Some carriers have reduced cost, in particular focusing on the fact that it is a temporary solution. In some areas the local authorities negotiations with carriers continue.

“The cost of transportation services, if the segment of the market is not highly regulated, rapidly responds to the increase in fuel prices. Excise factor will also play to raise prices,” — says senior economist of economic strategy Center Irina Piontkovsky. The level of competition and barriers to entry of new participants, she said, also affect the price. “If competition is weak, one-two carrier, and new players to enter the market is difficult, then the tariff increase can be substantial,” concluded Piontkovsky.


2016 was the year the dynamic increase of tariffs. In particular, the electricity tariffs increased by 60%, gas 42%, heating — 88.4%. According to experts, the “communal” will continue to go up, but not dramatically.

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Ukrainians waiting for a rise in price of electricity by 25% in March 2017. “This latest planned increase, although after the tariff does not cover the cost of production and delivery of current,” — said Belan.

Also, according to her, a small possible increase in tariffs for gas and heating because since the last sharp rise increased the price of imported gas. Overall, experts predict, the cost of housing services will rise by only 14% compared with the twofold growth in 2015 and almost 50 percent increase in 2016.

Alcohol, beer, cigarettes

Alcohol prices in January rose 0.7%, tobacco products — by 2.1%, and the value of those goods will rise. The reason for the increase in excise duties, approved by Parliament in December 2016.

“In January the prices of alcoholic beverages increased depending on the increase of cost of raw materials. The price of brandy increased with an increase of excise tax rates from January 1,” says Executive Director of the Association “Ukrvodka” Alina Soloman.
Re the price of alcohol will increase from 1 March — from that day excise tax rates on alcohol will increase by 20%.

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According to the expert, now the company analyze and calculate prices. What they will be after March 1 are not yet known. “The minimum price of a bottle of vodka 0.5 liters will be 80 UAH”, — said Soloman.

According to the Director of the division of corporate issues and communications of the company “JTI Ukraine” Alexander Kohut, with the increase in the rate of excise duty to 40% from 1 January 2017 the rising cigarette prices in 2017 should be at least 4-5 UAH per pack.

The price increase had to happen from the day of raising excise duties from 1 January. However, according to experts, prices are rising gradually. However, to this rule there are exceptions. In 2016, after raising the excise duty rate is 40%, the cost of cigarettes has fallen by 20-30% at the peak. “To predict the course of events with the increase in cigarette prices is difficult. While we are seeing that the market moves in the direction of the transfer of increased excise taxes in the price of cigarettes,” said Kohut.

“In January compared with December, the average selling price in Ukraine for beer increased by 4.9%,” — said General Director of the Association “Ukrpivo” Galina Korenkov.
This does not mean that the retail price has increased by the same amount. It depends on the stock, organized by manufacturers, transport costs, the cost of the bottle.

“We are particularly dependent on the existing regional energy tariffs. The latter’s share in the cost of a liter of beer on average is 15%. As soon as changing energy tariffs, it is immediately reflected in the price,” said Korenkov.


2017 began to increase in fuel prices: 2.8% in January compared to December.In the short term prices will continue to rise, schitaet experts.

“From the beginning of 2017, prices rose by 50-60 kopecks per liter. At the moment it is the potential for growth by 0.5-1 UAH”, — says Director of “Consulting group a-95” Sergey Kuiun. According to him, the main reason is delayed, the December increase in prices caused by OPEC’s decision to reduce oil production. This decision was taken in November 2016. Be the first to in December responded to the wholesale market and the retail price has not changed.

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There is another reason of the price. 2017 abolished the 5 percent sales tax on retail sales, but in proportion to the increased basic excise duty on petroleum products. Currently it is charged at the border or in places of production, while in 2016, he was charged with refills. “For the legal market, in addition to the method of administration, nothing has changed. For the illegal part, and it was about 50% of the market, the situation has changed,” — said the expert.

If earlier the excise duty on retail sales of illegal immigrants could not pay, now they have lost the opportunity because they are forced to purchase fuel from this tax. In this regard, cheap segment began to rise in price, although the premium segment is also not left behind. According to Kuyun, the price of liquefied petroleum gas, the growing popularity of which is due to the low price compared to gasoline in January fell by 50 kopecks per liter due to a surplus of resource on the market.

In February, the price of LPG started to grow, however, the attractiveness of this motor fuel will remain in respect of improving the Tax code of excise duty compared to petrol 21 euros to 42 euros for 1 thousand litres.

To predict the price dynamics for a long period is extremely difficult, because it’s the equivalent of trying to predict oil prices and, more difficult, the hryvnia.
“Petroleum products remain at 80% of imported goods, hence, their value depends on the exchange rate. In addition to the currency peg of the customs value of the fuel, in the currency established excise taxes. Total currency component in gasoline and diesel fuel reaches 85% in the price structure of petroleum products at filling stations”, — concluded the expert.