The national Bank said the reasons for severe deflation

Нацбанк назвал причины сильной дефляции

The NBU said the reasons for deflation in August

Rising prices for food were offset by falling fuel prices and slower growth in regulated prices.

In August, consumer inflation in annual terms has slowed to 8.8% (9.1 percent in July). On a monthly measurement of prices fell 0.3%. Core inflation slowed in annual terms in August was 7.2% (July – 7,4). This is stated in the report of the National Bank of Ukraine.

However, a slight excess of the forecast was due primarily to the high growth rates of prices on food. In addition, in August the prices of individual vegetables and livestock products grew slightly faster than expected. At the same time, this deviation was largely offset due to lower than expected core inflation, the fall in fuel prices and the slowdown in the growth of administratively regulated prices.

Tight monetary policy continued pressure on prices, in particular through the channel of the exchange rate. Most of all it is reflected in the prices of food commodities, the growth of which slowed to 1.4% y/y. In particular, slowed the growth of prices of appliances, furniture, leisure goods, pharmaceuticals, household chemicals, etc. the prices of clothing and footwear remained the same as last year, and the cost of cars and computers – has declined.

The rate of growth of prices for food products with a high degree of processing remained unchanged (8.9% y/y). On the one hand, the prices of dairy and meat products. On the other hand, not so fast growing prices for pasta, coffee, olive oil, sauces and juices that may be partially a reflection of the exchange rate effect.

The rise in prices of services accelerated (to 13.9% g/g) under the influence of strong consumer demand and relatively high wage growth. In particular, the accelerated growth of prices for services of restaurants and cafes, mobile communications, cultural institutions, and outpatient services.

The rising prices of raw food also accelerated (to 10.9% yoy). Growing prices for livestock products: milk, beef and pork. This is due to the reduction of livestock and a strengthening of external demand. Slowed down and cheaper eggs. In addition, the increased cost of potatoes due to low yield. However, in annual terms prices fell watermelons on the background of good harvest. Due to the expansion of supply has slowed the growth of prices for most vegetables, including onions, tomatoes, cucumbers, zucchini, etc.

The rate of growth of administratively regulated prices has declined (to 14.8% yoy). The cost of natural gas for the population decreased, given the decline in prices on world markets and a change in the methodology for calculating tariffs. The growth rate of prices for tobacco products and alcohol remained at the level of the previous month.

Earlier it was reported that prices in Ukraine do not grow for three consecutive months. Price reduction in Ukraine was observed during the summer months. For the season, the deflation was 1.4%.

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