RoboForex analyst: inflation is decreasing for the fourth month in a row

In April, the State Statistics Service of Ukraine released data on consumer inflation. In annual terms, it slowed down to 17.9%, compared to March values, this indicator decreased by 3.4%. The decline continues for the fourth month. This is due to an increase in the supply of food products, an improvement in the situation in the energy sector, as well as a stable exchange rate of the hryvnia. The latter became possible thanks to the measures taken by the NBU to combat speculators and large-scale financial assistance from international partners. Now, inflationary risks remain primarily due to the uncertainty associated with the military conflict and the possible shortage of electricity in July of this year. This was reported by Andrey Goilov, RoboForex analyst.

The growth dynamics of consumer inflation in Ukraine is presented in the diagram below.

Consumer inflation, y/y (%). Source: NBU

Core inflation decreased from 19.8% to 16.9%. Such a rapid fall in inflation is associated with a significant supply of food and fuel, stabilization of the situation in the energy sector, improvement in inflationary expectations, recovery of production chains after the energy crisis and a favorable situation in the cash segment of the currency market. At the same time, the slowdown in inflation is explained by the effects of the “low base” last year.

In the current circumstances, the support from the EU, the USA, the IMF and the World Bank is a stabilizing factor. Without this help, the rise in prices for imported goods would have been more intense.

Consumer inflation by product group in April, y/y (%). Source: NBU

The greatest growth is observed in transport (+23.6%), food products (+22.2%) and hotel and restaurant business (+21.9%). Given the fall in state budget revenues, consumer inflation may resume growth. The Cabinet of Ministers is going to return the VAT and excise tax on fuel, which may lead to its increase in price by 20%.

On the cash foreign exchange market, the hryvnia against the US dollar was fixed below the level of 37.90, and the euro reached the level of 40.80. Statistics show that the regulator spends very significant funds on maintaining the exchange rate of the Ukrainian national currency. Problems with the export of agricultural products only aggravate the situation, as the revenue in foreign currencies decreases. According to preliminary estimates of the Ministry of Economy, losses from restrictions on the import of Ukrainian agricultural products exceeded the mark of 120 million US dollars.

Source: Ministry of Finance

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