Ukraine’s Inflation Rate Drops to 3%, Lowest in Nine Years

Ukraine’s inflation rate fell to its lowest level in nine years in February as food prices continued to decline after a good harvest last year.

Consumer prices rose 3 percent from a year earlier compared with 3.7 percent in January, the statistics office in the capital, Kiev, said today on its website. The median estimate of seven economists in a Bloomberg survey was for a 3.2 percent advance. Prices increased 0.2 percent from the previous month.

The government is targeting 2012 inflation of less than 7.9 percent as economic growth in the former Soviet nation slows to 3.9 percent from 5.2 percent last year. Ukraine “has all economic grounds” to keep price growth beneath the official goal, Ihor Shumylo, who heads the central bank’s economic department, said March 2. The bank has lowered interest rates on some refinancing operations twice this year.

The result means inflation may slow to 1 percent by May, Alexander Valchyshen, head of research at Investment Capital Ukraine in Kiev, said by phone. “There are conditions for that as the authorities are trying to control consumer prices.”

Factory-gate prices rose 7.5 percent from a year earlier in February and 0.8 percent from the previous month, the statistics office said.

(Updates with comment from economist in fourth paragraph.)
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