Ukrainian Inflation Slows First Time Since 2013 on Hryvnia

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Ukrainian inflation, the fastest in Europe, slowed for the first time since September 2013 after the national currency stabilized.

The rate declined to 58.4 percent from a year earlier in May after a 60.9 percent surge in April, the statistics office in Kiev said Friday on its website. That exceeds the 58.1 percent median estimate of five economists in a Bloomberg survey. Prices advanced 2.2 percent from the previous month.

The government, battling a yearlong pro-Russian insurgency in the nation’s east, is also grappling with a recession and a plunge in the hryvnia. The central bank kept its benchmark interest rate at 30 percent last week, saying it sees inflation slowing “significantly” during the next year.

“Inflation slowed year-on-year but still it’s horrible,” Alexander Valchyshen, head of research at Investment Capital Ukraine in Kiev, said by phone. The monthly increase “means the government and the central bank must act more actively to curb inflation.”

Price growth has also been driven by an increase in utility tariffs, a requirement of the International Monetary Fund, which is providing $17.5 billion of bailout cash. Another advance in tariffs, aimed at eliminating heating subsidies and narrowing the budget shortfall, will take place in October.

The hryvnia, which lost 33 percent against the dollar in the first quarter, has since rebounded 11 percent, data compiled by Bloomberg show. It traded 0.1 percent stronger at 21.035 against the U.S. currency at 4:45 p.m. in Kiev. The nation’s bonds maturing in April 2023 rose 1.9 cents to 51.067 cents on the dollar.

Ukraine’s producer prices rose 42 percent in May from a year earlier, the statistics office said. Prices of goods leaving factories and mines declined 0.4 percent from April.

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