Ukraine's inflation, the fastest in Europe, slowed in June, as food prices rose more slowly thanks to an increasing supply of fruits and vegetables from local farms. The annual inflation rate fell back to 29.3 percent in June from the 31.1 percent high hit in May according to data released by the Kiev-based state statistics committee earlier today. Food prices, which constitute about 60 percent of the basket used to measure the Ukraine consumer price index, rose 43.9 percent in June from a year ago, compared with a 48.5 percent increase in May.
Consumer prices rose 0.8 percent in June from May, the slowest monthly increase so far this year.
Producer prices on the other hand accelerated in June (a bad sign for the future of consumer inflation) rising 4.2 percent month on month from May, which compares with a 3.7 percent increase in May from April, according to separate data released by the state statistics committee. Year on year the producer price index was up to a shocking 43.7% from 37.6% in May.
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The reason the inflation seems to upset noboddy in Ukraine I would attribute to fast wage increases accross the board and access to consumer credit (until a few years ago inexistant). However how Ukraine can stay competitive and immune for the credit crunch beats me. I would expect banks to become conservative in their lending practices. Standards & Poors claims 75% of outstanding loans are problematic. Yet credit is still available and easy to obtain. Go to a bank open an account for the first time in your life and they give you as a consumer a $2000 credit (overdraft)... Try doing that in a eurozone bank. The only thing I can think of is steep competition between Banks in this emerging market.
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