News
07.09.2009
Ukraine’s Inflation Unexpectedly Slowed in August
Ukraine’s inflation rate, the highest in Europe, unexpectedly declined in August for the first time since June as prices for food seasonally slid.
The rate fell to 15.3 percent from 15.5 percent in July, the state statistics committee in Kiev said today in a statement on its Web site. The median forecast of nine economists in a Bloomberg survey was for 15.7 percent. In the month, prices dropped 0.2 percent after declining 0.1 percent in July.
The central bank cut its key discount rate twice since June to 10.25 percent, saying price pressures have “eased” since inflation peaked at 31.1 percent last May. The government wants the central bank to lower rates further to make loans cheaper. Prices for fruit dropped 8.2 percent in August from a month ago and prices for vegetables slumped 15.3 percent.
“Despite positive seasonality, the credit squeeze that keeps money supply virtually stagnant and weak domestic demand in the economy is keeping inflation down,” said Alexander Morozov, the chief economist at HSBC in Moscow. “Relatively stable administrative prices” such as utility tariffs “act as an additional counter-inflationary factor.”
The government is struggling to curb inflation as the global financial crises and recession left the economy in tatters. The government sees the inflation rate declining to 13 percent in December, compared with 22.3 percent in the same month a year ago.
Producer prices, an early indicator of inflation, declined 3.7 percent in August from the same month a year ago, the statistics committee said in a separate press release today. On month, producer prices rose 1.8 percent, according to the press release.
Bloomberg
