Ukraine CPI Drops More Than Estimated, Boosting Rate-Cut Chances

  • Consumer prices rose 6.9% in June after 7.5% advance in May
  • Central bank says inflation slowdown can bring more rate cuts

Ukrainian inflation slowed for a seventh month as the hryvnia strengthened, increasing the chance the central bank will continue trimming borrowing costs at its next meeting.

Consumer prices rose 6.9 percent from a year earlier in June, compared with 7.5 percent the previous month, the State Statistics office said Friday on its website. The median estimate of six economists in a Bloomberg survey was for a 7.2 percent advance. Prices fell 0.2 percent from the previous month. 

“There were no drivers of consumer inflation in June, as the hryvnia appreciated last month and vegetables and fruit remain cheap,” Konstantin Fastovets, an economist at Kiev-based Adamant Capital, said by phone before the release. “I expect the central bank to further reduce its base rate, slightly, by 0.5 percent.”

Seeking to help maintain Ukraine’s recovery from an 18-month recession, monetary-policy makers lowered their benchmark interest rate to 16.5 percent from 18 percent last month, pledging further easing if price pressures continue to ease. As the government awaits a resumption in disbursements from a $17.5 billion bailout, the hryvnia has gained 0.5 percent against the dollar in the past month.

Producer prices rose 15.7 percent from a year earlier in June, holding steady from May, Friday’s data showed.

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