News
09.11.2009
Ukraine’s Inflation Rate, Highest in Europe, Slowed in October
Ukraine’s inflation rate, Europe’s highest, slowed in October for a third month as the country’s recession blunted price pressures, which may allow the central bank to resume reducing interest rates.
The consumer price index fell to 14.1 percent from 15 percent in September, the Kiev-based state statistics committee said late yesterday in a statement on its Web site. The median estimate of nine economists in a Bloomberg survey was 14.4 percent. On the month, prices increased 0.9 percent after growing 0.8 percent in September.
Economic contraction, including a record annual 20.3 percent shrinkage in the first quarter, is helping subdue inflation, which the government has failed to push under 10 percent since 2003. The central bank cut its key rate twice since June as the recession curbed consumer demand.
“Benign monetary dynamics suggests that the disinflation trend will continue in the coming months,” Alexander Morozov, chief economist at HSBC in Moscow, said before the release. “The annual inflation rate should keep falling.”
Inflation, which peaked at 31.1 percent in May 2008, slowed from February through May, allowing the central bank to cut the discount rate to 10.25 percent. The government wants rates to fall further to spur economic growth.
Shrinking Output
Output has been shrinking since the fourth quarter of last year as demand for exports such as steel plunged, investments waned and the currency weakened. The International Monetary Fund, which approved in November a $16.4 billion standby loan for Ukraine to support the national currency and banking system, said on Nov. 4 the country’s economy remains “highly fragile.”
The Washington-based lender estimates an average inflation rate of 14 percent this year and 9 percent in 2010. The government, expects it to decline to 13 percent in December, compared with 22.3 percent a year earlier.
Producer prices, an early indicator of inflation, increased 1.9 percent on the month in October, according to the statistics office. Annual producer prices rose 5.1 percent.
Bloomberg
