REUTERS
Core inflation will continue to slow to 5.0% in 2019.
Consumer price inflation in Ukraine will continue decelerating and will return to its target range in early 2020.
"Inflation will decline to 6.3% by the end of this year and will reach the target range by early next year," the National Bank of Ukraine (NBU) said in its Inflation Report for April 2019. "It is expected to meet the medium-term target of 5% in late 2020."
Read alsoUkraine's Central Bank forecasts economic growth will decelerate temporarily in 2019
According to the NBU, the disinflation will be driven by tight monetary conditions and restrained fiscal policy; slower wage growth as wages gradually converge with the levels of neighboring countries, and labor migration from Ukraine subsides.
Other factors include hryvnia appreciation in Q1 2019, which will restrain growth in the prices for nonfood goods; lower global prices for natural gas, which will also pass through to domestic prices; and a larger supply of both domestic and imported food products.
The NBU forecasts that core inflation will continue to slow (to 5.0% in 2019 and 3.7% in subsequent years), primarily due to lower pressure from aggregate demand.
Services prices will be the fastest growing component of the core CPI [Consumer Price Index], although their growth will slow markedly as wage growth decelerates. Low imported inflation, coupled with the moderate volatility of the hryvnia exchange rate, will put downward pressure on both core inflation and raw food prices.
An increase in some tariffs to market levels and higher excise taxes on alcohol and tobacco products will restrain the decline in inflation. As a result, administered prices will grow by 13.9% in 2019, and by almost 10% in subsequent years.