Inflation in Ukraine in July was below the forecasts of Bloomberg, which predicted it at a zero level compared to June and 12.1% for the year, as well as more optimistic forecasts of Dragon Capital (- 0.3% month on month and +11.8% year on year), according to the chief economist with Dragon Capital, Olena Belan.

"The decline in consumer prices mostly owes to the sharp seasonal fall in the prices for vegetables," she says, adding, "According to our estimates, the core inflation in July was about 8.0%, which roughly corresponds to the level of June. We believe that the resumption of domestic consumer demand, caused by softer fiscal policy and the resumption of lending, will contribute to rises in the prices of many items in the second half of this and next year, which excludes slowdown of core inflation," the expert predicts.

According to Belan, annual inflation rate is expected to further slow down in August and fall below 10% in September (due to the higher comparative base) before the next surge in the fourth quarter.

In addition, the previous inflation forecast for the end of 2011 remains unchanged at 10.5% (which is slightly higher than the consensus forecast of 10.2%) and the slowdown in consumer prices next year to 8.5% (which is below the consensus forecast of 9.5%).

Meanwhile, Belan specified, Dragon Capital forecasts do not include the increase in the administrated utility rates until the end of 2012.

As reported, in July Ukraine had a deflation of 1.3% against a rise in prices by 0.4% in June. Food fell 2.6% compared to growth of 0.3% in June.

UKRINFORM