Experts elaborate on prices amid lockdown – forecast

Ukrainian experts say the introduction of a full lockdown nationwide may provoke a change in the pricing policy for certain groups of goods.

Executive Director of Centre for Economic Strategy (CES) Hlib Vyshlinsky says a decrease in demand may lead to a drop in prices of food and goods, for example, such as clothes, as people working remotely do not greatly need it. He believes that the lockdown will not influence food prices, the Ukrainian TSN TV news service wrote on December 1.

"In fact, even the tough format [of the quarantine] that was introduced in the spring had neither positive nor negative effect on prices. Two factors now have a significant impact on prices," he said.

Read alsoHarvest 2020: Challenge for farmers, rising food prices"Firstly, this is devaluation. But it is not about the hryvnia against the U.S. dollar, because it has already taken place and the hryvnia stabilized at UAH 27.5-UAH 28.5 per dollar, it's the devaluation of the dollar against the euro, since we import a lot of things from the eurozone. We see from [prices of] goods, foodstuffs, and medicines that are purchased in Europe in euros that the devaluation against the dollar, let's say by 10%, was combined with the devaluation against the euro by another 15% and, accordingly, this gave a noticeable increase. Secondly, this year, we get a smaller harvest of grain and many other crops. This leads to a rise in prices of what is produced directly from grain, and then on prices of meat and milk due to lack of feed," he said.

In turn, Head of the Center of Macroeconomic Modeling at Kyiv School of Economics (KSE) Yuriy Sholomytskyi believes that the rise in food prices will not depend on the lockdown. According to KSE forecasts, prices of food products will grow by 4% on average over the year, while the quarantine will have no effect on the indicators.

"Prices are growing evenly. The dynamics are quite strong for some food products. But it depends on the harvest. This, for example, sunflower oil, whose price is expected to grow by 4% over the year. Then it may remain at this level," he said.

However, President of the Ukrainian Agribusiness Club Association (UCAB) Alex Lissitsa believes that, despite the poor harvest, the decline in demand over the shutdown of restaurants and food markets may lead to a drop in prices of those foodstuffs that are difficult to store. This, will affect agrarians, however, one should not expect tangible price hikes for domestic products.

Lockdown in Ukraine: Background

• According to certain media outlets, the strict quarantine may be introduced in Ukraine in December.
• Ukrainian President Volodymyr Zelensky's spokesperson Yulia Mendel says there is a possibility of introducing a lockdown nationwide, but its date is still unknown.
• Members of the Servant of the People parliamentary faction explained that it was quite difficult to impose significant restrictions on public transportation services during the lockdown since this requires the development of a system of special passes.
• On December 1, 2020, Health Minister Maksym Stepanov said the ministry would not recommend shutting down public transportation services amid the lockdown.