Inflation is not the plan of how and why the prices will increase in Ukraine up to the end of the year

Autumn in Ukraine is expected a significant devaluation of the hryvnia. According to experts, the dollar may in the coming months to cross the psychological mark of 28 USD. A quarter of the consumer basket of Ukrainians – imports. In addition, the dollar exchange rate affects the price of gasoline. In such a situation, the rise in prices is inevitable. National Bank a few months ago confirmed its forecast of inflation: prices in 2017 should grow in the range of 6-10%. At the same time, the majority of respondents website “Today,” experts believe that inflation for the year could reach 12%. The website “Today” has found out, what will happen to prices in the Ukraine until the end of the year.

Why prices are rising

As explained by economists, there are several reasons for inflation. The increase in cost of goods (for example, expensive gasoline and have to spend more on transportation), high demand for a product (if there is high demand, then prices can soar in a matter of days) or income growth (which leads to an increase in aggregate demand, people earn more and buy more).

According to government estimates, the average wage grew by about 37%, and therefore should grow and prices. Thus, according to the head of analytical Department of Concorde Capital Oleksandr Parashchiy, it is important that the pace of income growth outpaced inflation. Then, despite the rise in prices, the level of welfare will rise. Inflation traditionally slows down in the summer when the first crops of vegetables and fruits. And in the fall when it is heating season and the rate the dollar, inflation is likely to accelerate.

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However, prices are rising not always and not everywhere. For example, according to the Central intelligence Agency (CIA), in 33 out of 225 countries, prices in 2016 is not increased, but rather fallen. Among these countries, Poland, Luxembourg, Singapore, Israel. In Ukraine, the last few years have seen double-digit inflation.

High inflation – it is normal for a developing economy, the Executive Director of the International Fund blazer Oleg Ustenko. In the advanced economies, prices are rising within an average of one to two percent per year. So, during the global crisis of 2008 in Ukraine the rate of inflation reached 22.3 per cent, and in the countries of the European Union, only 3.4%. At the end of last year in the EU rose by 1.66%, and in Ukraine – 12.4%.

Inflation affects the value of money. Thus, in countries with stable currencies and low inflation, for example, a loan for an apartment can be rented at 3-5% per annum. In Ukraine, given the fact that the money was quickly devalued, banks give such loans to 23-25% per annum.

Since the beginning of this year, the NBU introduced a policy of inflation targeting. The task of the Agency over several years to reduce the price increase to 5-6% per annum. The national Bank may change the interest rate, and are dependent on the interest rates on loans and deposits in commercial banks. The decrease in the discount rate leads to higher inflation, and the increase – on the contrary. However, at the moment, the real price growth is higher than projected by the national Bank.

As prices rise in 2017

According to the forecast, the NBU, inflation by the end of this year will fluctuate in the range of 6-10%, the Ministry of economic development a few months ago, the government forecast revised. According to their estimates, prices will rise by 11.2%. “Projected close to the IMF forecast, namely: 2% GDP growth, consumer prices (annual measurement) and 11.5%”, – noted in Department.

The prices fall may affect the “modernizing” of pensions. PPO to Alexander Parade, this effect may only be 0.2-0.3 percentage points. “Pensioners will have more money on hand, some pressure on prices in the shops definitely will. Our speculators will always take advantage,” – said the head of analytical Department of Concorde Capital. Entrepreneurs with this interpretation does not agree – the prices determined by the market. And if revenues do increase, then the market will go up and prices, says the Zaporozhye businessman Irina konevich who.

“I have several shops in a residential area. As I raise the prices if my grandmother buy at bolboci bread? Buy very cheap. If I raise prices, they will go to another store, or the market will go. If income will increase, if the purchase prices will rise, of course, reconsider price tags and we. But only because raised pensions, I’m not going to raise prices”, – says the businessman.

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To include the “printing press” to increase pensions will not be so sharp inflation, I’m sure the analysts of “Alpari”, should not be expected. Money on “modernizing” get for the expense of an overfulfillment of the budget of the Pension Fund (including by raising the minimum wage). “Prices could threaten the growth of salaries or pensions out of thin air, by printing press. If such growth occurs at the expense of redistribution of means, he does not become an additional factor for the growth of prices”, – says senior analyst “Alpari” Vadim Iosub.

According to experts, much more inflation will affect rise in prices of agricultural products, the devaluation of the hryvnia and the beginning of the heating season. “The forecast inflation of about 8% in 2017. According to the results of the first half shows that this indicator will not be achieved. We can say that inflation will be in double digits. I think it will vary between 12% with a possible error of 2 percentage points. It is possible that can reach up to 14%”, – says Oleg Ustenko. Concorde Capital also suggest: for the year prices will be 12%.