Why slowed down inflation, the NBU said about the growth of prices in Ukraine

In April the inflation in Ukraine slowed down and amounted to 12.2% yoy (15.1 per cent yoy in March). Month-on-month growth of consumer prices was 0.9%.

“The rapid deceleration of annual inflation in April was expected and was primarily the result of the exhaustion of the impact of a number of administrative factors. In particular, in April 2016 has been a significant growth of tariffs for natural gas, which will affect the base of comparison of the current year”, – explained the official statistics of the National Bank of Ukraine (NBU).

Actual inflation in annual terms was slightly below the forecast of the National Bank, which included the slowdown in consumer price inflation to 9.1% by the end of 2017.

The NBU explains this is primarily the weaker-than-expected pressure from fundamental factors:

core inflation remained unchanged at 6.3% yoy (on a monthly measurement was 0.6%), whereas it expected a slight acceleration.

The prices of some goods remained lower than last year.

“The impact of these factors was realized, led to the acceleration of price growth on food products with a high degree of processing and price of services. However, their effect was offset by other factors. So, thanks to the further strengthening of the hryvnia and the improvement in inflation expectations in April, rising prices for clothing and footwear were lower than expected. In addition, we continued to slow the growth of prices of home textile, household appliances, kitchenware, pharmaceutical products, and the prices of some goods remained below last year’s (audio – and video equipment, laptops, mobile phones)”, – noted in the NBU.

rising prices for crude food goods accelerated to 10% yoy in April (2% m/m).

“This acceleration was expected and has occurred, in particular, due to the low comparison base (last year, prices for crude foodstuffs decreased as a result of trade and transit restrictions from the Russian Federation not only for the Ukrainian but also for Turkish goods). A smaller range of vegetables and fruits in comparison with last year, including through increased exports and reduced imports, caused a slowdown of the fall in vegetable prices and the resumption of growth of prices for fruit. In addition, the accelerated growth of prices for meat and raw milk as a result of increasing production costs and intense export. At the same time, continued in April reduction of prices on eggs compared to the previous month, while in annual terms their growth slowed down in the Wake of continued partial restrictions on the export of poultry products”, – said the NBU.

the growth of prices and tariffs governed administratively slowed to 25.7% yoy (1.2% mom) due to the exhaustion of the low comparison base.

The growth of prices of tobacco products also slowed down a bit.

“Despite another increase in excise duties from 1 April on separate types of alcoholic beverages, prices for these products slowed growth. The growth of prices of tobacco products also slowed a bit due to the exhaustion of effect of a favourable comparison base. At the same time, in April accelerated the rise in prices of postal services As in previous months, a significant factor in the acceleration of administratively regulated prices was the increase of tolls in road passenger transport due to the increase in the cost of services provided”, – noted in the national Bank.

fuel prices as a whole slowed down to 21.3% y/y (1.2% m/m) despite the acceleration of growth of prices for liquefied natural gas due to disruptions in supply from Russia.

The national Bank concludes that the current dynamics of consumer inflation confirms the attainability of the inflation target the results of 2017.

Recall, the NBU forecasts that this year inflation in the range of 8% ± 2 p. p.