In May 2019, consumer price inflation was 9.6% yoy, up from 8.8% in April. In monthly terms, prices grew by 0.7%. This is according to data published by the State Statistics Service of Ukraine (SSSU).
Actual inflation exceeded the projections the NBU published in its April 2019 Inflation Report. This mainly resulted from faster-than-expected growth in the prices of raw foods because of their scarce supply. In addition, fuel prices also rose faster than expected, owing to the difficulties with imports of energy resources from Belarus and Russia. As in previous months, core inflation came in slightly below the forecast.
- In May, core inflation held steady at 7.4% in annual terms.
The growth in non-food prices slowed to 2.2% yoy as the FX market situation remained favorable. Specifically, prices for clothing and footwear, furniture, pharmaceuticals, transport vehicles, and personal care products increased at a slower pace.
In contrast, the growth in the prices of processed foods sped up, to 8.7% yoy. In particular, prices for meat products increased, driven by dwindling supply and higher global prices. The prices of dairy products continued to rise, due to higher global prices and a more pronounced decline in milk production.
The growth in the prices of services edged up, to 14.1% yoy, fueled by ongoing wage increases and robust consumer demand. More specifically, the prices of housing rentals, catering and hotel services, health resorts, and dry-cleaning increased at a faster clip. This was partly offset by the slower growth in the prices of telecommunications and outpatient services and in housing maintenance fees.
- The growth in raw food prices continued to accelerate, to 9.3% yoy, propelled mainly by an increase in the prices of borsch vegetables, milk, and meat. The decline in fruit prices slowed, owing to a month-on-month rise in apple prices and year-on-year increase in strawberry prices. Egg prices continued to fall, due to a significant increase in poultry output, restraining somewhat the growth in raw food prices.
- The growth in administered prices decelerated, to 17.6% yoy. More specifically, the growth in gas prices decelerated on the back of respective trends on the global markets. The prices of alcoholic beverages, tobacco, and transportation services also rose at a slower pace.
- Fuel prices returned to growth in annual terms (3.1%). This resulted from the temporary disruptions in imports of oil products from Belarus, due to contaminated oil found in a major Russian pipe-line, and the increases in global oil prices seen in previous months.
Actual inflation, in particular core inflation, shows that underlying inflationary pressures are generally in line with the NBU’s expectations. Nevertheless, overall inflation came above the forecast trajectory, driven mainly by temporary supply factors. The NBU will produce revised estimates of inflation and other macroeconomic variables reflecting the impact of these and other factors on 18 July 2019 during a press briefing on decisions taken by the NBU Board at its meeting on monetary policy issues. The July 2019 Inflation Report, slated for publication on 25 July this year, will describe the updated forecast in greater detail.