Ukraine Inflation May 2008

Inflation in Ukraine accelerated last month to the fastest in more than a decade. The annual inflation rate rose to 31.1 percent in May from 30.2 percent in April, the highest in Europe, accroding to the Kiev-based state statistics committee yesterday.



Consumer prices increased 1.3 percent in May from April, while producer prices rose 3.7 percent from April and 24.2 percent from December 2007.

The government of Ukraine, where the World Bank estimates almost 3.7 million people live in poverty, has so far failed to reduce the average inflation rate this year from 16.6 percent in 2007. Government and central bank officials have pledged to curb inflation to keep the economy stable as the former Soviet republic strengthens its economic ties with the European Union.

The central bank raised the benchmark interest rate to 12 percent from 10 percent in April and strengthened the hryvnia by 4 percent on May 21 in an effort to curb price increases. The Natsionalnyi Bank Ukrainy earlier predicted inflation this year will be below 20 percent.

Accelerating price growth threatens the credit ratings of Ukraine and other emerging-market nations, Fitch Ratings said May 27. Central bank Governor Volodymyr Stelmakh in April called inflation ``a real threat'' and said the government should cut social spending to help tame price increases.