Millennium Capital Commented on Ukraine Inflation in February 2009
OREANDA-NEWS. On 18 March 2009 was announced, that according to the State Statistics Committee, the Consumer Price Index (CPI) grew 1.5%, m/m in February 2009, having decreased from January 2008 (2.9%, m/m). This resulted in the annual inflation of 20.9%, y/y in February. The main inflation factors were the rise in the prices for tobacco and alcoholic beverages as well as for home appliances by 3.4%, m/m and 2.6%, m/m, respectively in February. The food prices increased by 1.4%, m/m. Meanwhile, pharmaceutical product prices went up by 5.2%, m/m in February.
At the same time PPI increased by 1.8%, m/m in February, mainly due to rise in food, chemicals, and metallurgy production prices by 3.5%, 3.6% and 4.4%, m/m, respectively. This contributed to 19.0% of annual PPI growth in February 2009.
The CPI growth in February may be explained by the further devaluation of hryvnia in February (up by 5.5%, m/m to UAH/USD 8.45 on the interbank market), which resulted in the price increase of such imported goods as home appliances, pharmaceutical goods, tobacco and alcoholic beverages. Additionally, the price growth of tobacco and alcoholic beverages was related to the gradual increase of the excise tax, which is planned to be increased by 25% and around 50%, respectively in 1H2009. Also Millennium Capital explains the producer price growth in chemical and metallurgical industries by the increase in their production costs, rather than by the acceleration of demand in these industries. Millennium Capital expects the price growth in March to be similar to that in February, while the decrease in the natural gas price since 2Q2009 may slightly decrease both CPI and PPI. Still, a lot will depend on the demand for metallurgical production since 2Q2009, which may stop the devaluation of hryvnia, thus decreasing the prices of the imported goods (constituting 25% of the consumer basket).
Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of the major investment banking institutions.
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