Fares and expensive products: in Ukraine increases inflation

In March 2017, consumer price inflation in Ukraine accelerated to 15.1% yoy from 14.2% in February. Month-on-month growth of consumer prices amounted to 1.8%. About it reports a press-service of the National Bank of Ukraine (NBU), citing official statistics.

Thus, inflation in annual terms has been growing for four months.

“The acceleration of inflation in annual terms was expected. Inflation raw food accelerated due to the increase in production costs, strong exports and the low base of comparison. Also influenced by planned increase of individual tariffs and excise taxes. But the improvement of the situation on world commodity markets led to the strengthening of the exchange rate of hryvnia in February and March, kept core inflation”, – said the NBU.

However, actual inflation in annual terms was slightly below the forecast of the national Bank.

• Core inflation slowed in March to 6.3% yoy, on a monthly measurement it amounted to 1.7%.

“This was due to the strengthening exchange rate of hryvnia in February-March 2017. Thanks to such trends in the currency market, prices for some imported goods have grown less significantly. In particular, this concerns the prices of clothing and footwear, personal care products, home textile, household appliances, medicines, medical equipment and supplies. In addition, some of the goods prices in annual terms decreased (vehicles with EU, audiovisual equipment, equipment for information processing)”, – said the NBU.

At the same time, the accelerated growth of prices for food products with a high degree of processing. This is due to the secondary effects from a rise in price of raw foods, including milk and meat, the national Bank noted.

Besides, continued to accelerate the growth of prices for some services included in core inflation. So, in March has increased the cost of services of restaurants and hotels, hairdressers, notaries, taxi, household services, and increased tariffs for telecommunication services. These trends are associated with increased costs, particularly labor costs, explain the NBU.

• Rising prices for raw food products accelerated to 7.5% in annual terms; for the month, prices rose 1%.

“This acceleration was expected and was primarily due to low base of comparison. This time last year, there were trade and transit restrictions from the Russian Federation not only for the Ukrainian but also for Turkish goods. As a result, a year ago, the supply of those goods in the domestic market have increased and prices have slowed the growth,” says the national Bank.

As a result, the NBU, the drop in prices of vegetables and fruits in annual terms, as expected, continued to slow down. However, the prices of these goods still remained significantly lower than in March 2016, due to the considerable offer, including due to early raise the temperature of the air.

Accelerated growth of prices for meat and milk due to the increase in production costs, reduction of livestock, and active export. Due to the persistence of partial restrictions on the export of poultry products continued to decrease in the price of eggs in comparison with the previous month, but in annual terms the low base of comparison resulted in their growth.

• Growth of prices and tariffs regulated by administrative, accelerated to 39.5% in annual terms; for the month up 3.2%.

So, in March 2017 has been the increase in electricity tariffs for the population. In addition, as in previous months, a significant factor in the acceleration of administratively regulated prices was the rise in price of fares in passenger transport. In March significantly increased the cost of postal services, in particular from March 24 PJSC “Ukrposhta” has increased tariffs for its services primarily due to the increase in the cost of labor. Has also continued to increase prices on tobacco products by raising excise taxes since the beginning of the year.

At the same time, despite the increase in excise duties on alcoholic beverages, the annual growth of prices of these commodities continued to decline. “This may be due to realization of previously accumulated stocks of these products, as well as margin from the increase in minimum prices in December last year”, – noted in the NBU.

• Fuel prices in March has not changed, so that in annual terms their growth slowed to 26.4%.

“The current dynamics of the consumer price index and its components confirms the attainability of the inflation target for 2017 results within the target range of 8% plus or minus 2 percentage points,” summed up the national Bank.

Recall that Easter basket in Ukraine for the year increased by 20%. “Easter inflation” were 1.33 times more than inflation per year (average 15%).