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NBU Comments On Inflation Dynamics In November 2017

11 December 2017

Press Release


Headline inflation predictably slowed down to 13.6% yoy in November 2017 versus 14.6% in October. Consumer prices increased at a slower pace from 1.2% in October to 0.9% mom, as was evident from the data published by the State Statistics Service of Ukraine.


The actual inflation came in higher than was forecasted in the October 2017 Inflation Report as food prices were rising at a faster rate.


Core inflation stood at 8.6% yoy in November (1.0% mom). Prices of highly processed foods grew more significantly than was expected reflecting second-round effects from an increase in respective raw food prices. Particularly, prices of meat products were growing faster, and so were prices for dairy products.


Prices for services that contribute to core inflation continued to increase at a faster pace driven by rising production costs and buoyant consumer demand.


In October-November, against the backdrop of weakening hryvnia in relation to foreign currencies prices of non-food products, most of which being imported (except for clothing and footwear), increased at modestly accelerating rates. In particular, this included prices of pharmaceutical and medical products, home appliances, furniture, personal care and cleaning products. Similar to previous months, prices for clothing and footwear rose slower owing to a lag effect of exchange rate fluctuations on prices (with most of the shipments of clothing and footwear being made a few months prior to the season).


Prices for raw food grew slower (23.9% yoy) in November compared with October, being, however, slightly above the forecast. Higher than forecasted was the increase in prices for dairy products and meat despite their expected slowdown in previous months. Growth of vegetable prices decelerated, as expected, on the back of growing supplies of late vegetable harvest, primarily, of borshch vegetables. Additionally, sugar prices decelerated against the backdrop of declining global prices and sufficient supplies in the domestic market, while high buckwheat yields discouraged further price growth for the crop. At this, fruit prices were growing faster bolstered mostly by higher than in the previous year prices of citrus fruits.  Also prices of eggs were growing at an accelerating rate against the backdrop of rising external demand and expanding export capacities of Ukrainian poultry producers.


• Growth in administered prices and tariffs expectedly decelerated (to 16.7% yoy) against a favorable base of comparison (October-November of 2016 marked an increase in heating and hot water tariffs) and was largely in line with the forecast. Growth in prices for alcoholic beverages, tobacco goods, and railway transport services also slowed down.


Alongside, a rapid growth in prices for bread and road passenger transport continued due to rising costs.


• Growth in fuel prices (17.7% yoy) was higher than projected in the forecast driven by higher oil prices and depreciation of the hryvnia against the euro (fuel excise taxes are set in euro).


The current trend of the CPI and its components is higher than the forecast published in the October 2017 Inflation Report showing a more drastic deviation, than expected, of inflation from its target by the end of 2017.


Last modification   11.12.2017