Inflation slows to 17.9% yoy in April - NBU
In April 2023, annualized consumer inflation slowed to 17.9% from 21.3% in March, thanks to a substantial supply of food, sufficient fuel reserves, and improved inflation and exchange rate expectations.
The National Bank of Ukraine (NBU) stated this, Ukrinform reports.
"The actual price growth rate was slightly lower than the trajectory of NBU's forecast published in the April 2023 Inflation Report, due to a larger-than-expected supply of food and fuel. Inflation was restrained by hryvnia’s strengthening in the cash foreign exchange market and improved inflation expectations," NBU says.
The slowdown in inflation is largely because of last year's comparison base, when consumer prices began to rise rapidly after the start of Russia's full-scale invasion.
NBU noted that in April, the rise in the price of processed food products slowed significantly (to 19.2% year-on-year, yoy). As in previous months, this is due to a slowdown in the growth of raw materials and fuel costs and the recovery of production and logistics chains amid a stable situation in the energy sector.
The growth in prices for bread and flour products, confectionery, sausages, beverages, and canned food continued to slow. A decline in global prices amid weak demand and uncertainty over the transit of food from Ukraine slowed the rise in prices for dairy products and sunflower oil.
According to NBU, the slowdown in the growth of prices for imported products was facilitated by improved exchange rate expectations amid the strengthening of the hryvnia cash exchange rate.
The increase in non-food prices also slowed significantly in April, to 15.5% yoy. NBU cited both the effects of the previous year's comparison base and improved exchange rate expectations as reasons for this.
The growth rate in the cost of services remained almost unchanged (15.2% yoy). Amid a stable situation in the energy sector and, consequently, entrepreneurs' expenses, the growth in prices for food services continued to slow.
Due to weaker demand, the cost of rent, housing repair and maintenance services, dry cleaning, and car maintenance grew more slowly. On the other hand, the cost of medical, insurance, telecommunications, and beauty services grew faster as demand gradually recovered.
The growth rate of raw food prices in April decreased to 26.2% yoy, NBU said. Prices for cereals and flour declined, while sugar prices slowed.
The rise in prices for greenhouse and imported vegetables slowed, mainly due to an increase in supply. "Borscht" vegetables rose at a faster pace in April.
Despite a seasonal increase in the supply of eggs, particularly from households, and a significant drop in the price of these products at the end of April, the annual growth rate of egg prices accelerated. NBU attributed this to the low comparison base of the previous year.
The higher rate of meat price rise may be explained by limited production capacity and weak imports.
Tobacco products grew more slowly, likely under pressure from illegal products.
The increase in prices for transportation services slowed due to fuel prices' stabilization. The moratorium on raising utility tariffs for households continued to restrain administrative inflation.
As Ukrinform reported earlier, according to the State Statistics Service, in April 2023, inflation in the consumer market slowed to 0.2%, down from 1.5% in March. Year to date, prices have risen by 3.2%.
According to NBU's May forecast, inflation in Ukraine is expected to decline sharply in the first half of 2023. By the end of the year, it will slow to 14.8%.