Approximation of the GDP growth rate to its potential level (-0.5% in the first quarter of 2011), real wage growth (11.3% in annual terms) and greater consolidated budget expenditures (18.7% in March, in annual terms) create additional risks of inflation from the demand side. This is stated in a research note of the National Bank of Ukraine.

According to the NBU, the consumer price index (CPI) growth in April by 1.3% (seasonally adjusted - 1.8%) was mainly due to the nonbasic inflation components (change over the month - 2.1%). Annualized inflation accelerated to 9.4% (4.7% YTD), which, inter alia, was due to statistical effects of comparison base.

The sharp rise in prices for raw products (1.7%) is due to the rise in fuel prices in previous periods and high rates of price growth in world food markets, the NBU believes.

However, the increase in the world energy prices caused fuel price hike by 4.9% per month. Officially regulated tariffs in April rose by 2.4% mainly due to increase in electricity tariffs by 15.1%.

According to State Statistics Service, in April 2011, inflation rate amounted to 1.3%. Over the first four months of this year, consumer prices rose by 4.7% and annualized inflation increased from 7.7% to 9.4%.

The Government expects that the rate of inflation for the year will not exceed the planned 8.9%. In turn, experts believe that consumer price growth will exceed 10%.

UKRINFORM