Ukraine inflation to fall in June-econ minister

Month-on-month inflation in Ukraine will decline in June from the May figure of 1.3 percent, Economy Minister Bohdan Danylyshyn said on Monday.

"Inflation in June will be considerably lower than in May," Danylyshyn told a news conference. He gave no forecast for the June figure.

Month-on-month inflation in April stood at 3.1 percent and the jump of 3.8 percent in March was the highest since 1999.

The May consumer price figure of 1.3 percent, released on Friday, was lower than analysts' expectations of 2.1 percent and compared with 3.1 percent in April.

Accumulated consumer price rises rose to 14.6 percent in the first five months of this year, compared to 1.9 percent in the same period last year. The government has yet to change its 2008 target of 9.6 percent which was first exceeded in March.
Monthly producer prices rose 3.7 percent month-on-month in May, down from 6.6 percent in April, according to statistics released over the weekend.

Danylyshyn said his forecast for a further dip in prices was linked to measures specifically aimed at curbing inflation and predicted "significant reductions in the consumer price index in June, July and August."

"Joint anti-inflation measures undertaken by the government and central bank played a significant role," he said.

"The central bank took measures to reduce monetary-based inflation and doing away with disproportions in the monetary sphere."

The central bank allowed the hryvnia currency, pegged to the dollar for three years in a narrow band of 5.00-5.06/$, to fluctuate more freely in recent months and revalued its official rate from 5.05. Its official rate now stands at 4.851.

He also praised the central bank's moves to curb "uncontrolled credits" to consumers.

Prime Minister Yulia Tymoshenko, restored to office last December, has said the measures will halt the inflation she says she inherited from her predecessor.
Analysts say price rises were compounded by her government's generous social spending, rises in wages and cash compensation paid to consumers who lost Soviet-era savings.

Inflation began soaring at the end of last year, due to a sharp rise in food prices following a poor harvest and increased social spending in the run-up to and aftermath of a parliamentary election in September.

Ministers last week launched the process of amending the budget, formulated last year under the previous government, promising higher revenues and expenditure.

Source: guardian.co.uk

Publication date: 6/10/2008