The annual rate of consumer inflation declined to 3.7% (the lowest rate ever recorded over the past 9 years). Overall, the lowest inflation rates on a month-on-month basis have been recorded since September, reaching record lows in statistical reviews (the CPI increased only by 0.2% in January).

The seasonally adjusted CPI has remained negative for the fifth successive month, having declined further to 0.8% in January.

For reference. As the State Statistics Service carried out revision of the list of goods included in the consumer basket used to calculate the CPI (from 296 to 335 components), the structure of the consumer basket underwent changes. The components of the core inflation have partly changed. 

In January 2012, the annual rate of the core CPI continued to decelerate to 6.6% (the core CPI remained unchanged on a month-on-month basis). It was achieved due to the discrete monetary and fiscal policy. Under the influence of secondary effects of a fall in prices for raw foods (5.3% over the year), prices for deeply processed foodstuffs, which are included in the core CPI, declined to 10.3% over the year.

Owing to a constraining impact of strengthening of the nominal effective exchange rate of hryvnia (by 8.1% over the year), the annual core CPI growth rate slowed down to 2.2%.

In January 2012, inflation was determined by its non-core component, which stood at 0.4% (contribution to the change in the CPI – 0.2 p.p.). After hitting a peak of 17.1% in June 2011, the non-core CPI growth on a year-on-year basis continued to decelerate to 0.1% in January. The key factor behind it was an ongoing fall in prices for raw foods (5.3% over the last twelve months) on account of last year’s bumper crop.

Administratively-regulated prices climbed to 7.8% on a year-on-year basis (in January – by 0.3%), contributing 1.2 p. p. to the CPI (0.1 p. p. over the month).

The slowing in economic activity continues to exert downward pressure on prices for products of basic export-oriented industries, bringing the producer price index growth (hereinafter - the PPI) down to 11.8% on an annualized basis. The PPI declined by 0.8% in January mainly due to a 4.9% fall in prices for processing industry products (contribution to the month-on-month change in the PPI made up “minus” 0.6 p. p.).