KYIV (Reuters) – Ukraine’s annual inflation probably hit a 1.5-year high of 8% in March, exceeding the central bank’s forecast of 7.6%, a monthly Reuters poll of Ukrainian analysts showed on Monday.
Inflation last moved above 8% in August 2019 before slowing down to the central bank’s mid-term goal of 5% as of the end of 2020.
Ukraine’s State Statistics Service plans to publish March data on April 9.
The rate of price growth jumped to 7.5% in February and continued speeding up in March despite the central bank raising its benchmark interest rate to 6.5% from a historic low of 6.0% on March 4 to fight inflation.
Analysts for Ukrainian banks and brokerages believe consumer prices have jumped largely due to imported inflation from world commodity markets.
Oleksiy Blinov from Alfa-Bank Ukraine said the increase in world prices for wheat, corn, sunflower oil and crude oil had amounted to 37%-156% over the past 12 months.
“These changes in external prices are directly and indirectly transmitted to consumer inflation in Ukraine,” said Blinov, who forecast March inflation at 8.3% and did not exclude a further rise.
Analysts also say the imbalance between the negative economic performance and consumers’ higher income gave an additional push to consumer demand and prices.
Food and energy prices continued to drive inflationary pressures, analysts at brokerage ICU wrote.
Ukraine’s economy, hit by restrictions imposed to fight the coronavirus pandemic, shrank 4.0% in 2020 while consumers’ income and spending grew 6.1%.
Analysts expect gross domestic product to have fallen 1.2% in the first quarter of 2021, the fifth consecutive quarter of economic contraction. Meanwhile, the government increased social payments further in March to help people get by in a prolonged lockdown.
Inflation may slow to 7.0% by the end of 2021 if the government manages to resume borrowing from the International Monetary Fund that has been locked since last year and to lift lockdown restrictions to let the economy recover.
(Reporting by Natalia Zinets; Editing by Hugh Lawson)
