Ukraine: Inflation plunges on fading base effect
September 6, 2011
In August, consumer prices declined 0.4% over the previous month, which followed a 1.3% price decline in July. As was the case in the previous month, the price drop reflected lower prices for food and non-alcoholic beverages (-1.2% month-on-month), in particular vegetables. Annual headline inflation plunged from 10.6% in July to 8.9% in August. The significant decline was the result of the waning of an unfavourable base effect, as in the same month last year the government rose gas tariffs by 50% in order to resume the Stand-By agreement with the International Monetary Fund. Meanwhile, core inflation, which excludes volatile items such as food and energy, maintained its upward trend by rising from 8.6% in July to 8.8% in August. The government anticipates inflation to close this year at 8.9% and to drop further to 7.9% by the end of next year.