Review of the economy of Ukraine, January 2014

01 Mar 2014

In January 2014, conditions of the real sector development remained difficult. Within the reporting period, despite the stable price situation on the consumer market, the economic activity remained not high due to weak external demand for basic home export products. Besides, in January, a considerable quantity of holidays and days off as well as an increase in socio-political tension in the country had an unfavorable influence on the economic situation.

By the January results, consumer prices went up by 0.2% versus the previous month. The seasonal increase in prices for raw products, chiefly vegetables and fruit (up by 9.3% and 2.5%, correspondingly) was the basic factor of such CPI dynamics. Despite a decline in prices for certain products, in particular eggs, the general level of prices for raw products grew by 0.6%. The year on year inflation remained at the level of 0.5%.

Change in consumer and producer price indices

(year on year change)

In January 2014, after the two-month reduction, prices for fuel and lubricants grew by 0.7% in Ukraine. The augmentation of the mentioned prices was at the expense of an increase in prices for fuel on world markets in the previous month.

Within January, administered prices grew by 0.5% which was caused first of all by a rise in prices for excisable goods, in particular, for alcoholic beverages and tobacco goods (up by 1.1%). By the results of the reporting month, prices for housing and communal services as well as for transportation services grew inconsiderably (by 0.3% and 0.1%, correspondingly).

Low core inflation indicators restrained the development of inflationary processes in Ukraine. For the eighth month running, the year on year core CPI remained at the level of 0.1%. Versus December 2013, the core inflation diminished by 0.1% first of all at the expense of a decline in prices for nonfoods, in particular, for clothes and footwear.

Contribution of components to the CPI change* (monthly)

In January 2014, industrial producer prices grew by 0.5% due to a rise in prices for supply of electric power, gas, steam and conditioned air (up by 2.2%). In January 2014, the year on year growth rates of the PPI increased to 1.9% as compared to 1.7% in December 2013.

In January 2014, the economic activity slowed down somewhat first of all at the expense of lengthy holidays in the reporting month. In January, a decline in the number of working days influenced the overall performance of economy sectors. The unfavorable foreign economic conjuncture continued to have the adverse effect on the domestic economy, in particular, on its basic export industries.

Production volumes of industrial activities oriented towards external markets continued to go down. In January 2014 on January 2013, production volumes of machinery construction showed the most sizable decrease, totaling «minus» 22.9%. The output of metallurgy industry and production of finished metal products (except for machines and equipment) as well as that of production of chemicals and chemical products continued to decline. In January 2014, the outputs of the mentioned industries came to «minus»10.1% and «minus» 8.3%, correspondingly. Within the reporting month versus the corresponding month of the previous year, it caused a decrease in total industrial output, down by 5.0%. The similar tendency was observed in construction industry. In January 2014 versus January 2013, construction works went down by 16.4%.

At the same time, internal consumer demand was remaining at a high level, which facilitated an increase in the retail trade turnover, up by 8.8% in January 2014 versus January 2013.

In the reporting month, a growth of agricultural production continued. The year on year growth rates of agricultural production made up 6.0%. Such dynamics were at the expense of an augmentation of animal husbandry indices. In particular, versus January 2013, production of meat, eggs and milk grew by 8.6%, 5.2% and 2.3%, correspondingly.

In January 2014 as against December 2013, under the influence of seasonal factors, the number of registered unemployed grew by 7.7% to 525.1 thousand persons. The registered unemployment rate correspondingly increased, up to 1.9% versus 1.8% in December 2013.

In December 2013, the average monthly nominal wage increased, which was attributable to payment of premiums and bonuses by the year results. On the contrary, in January 2014, it traditionally declined (down by 13.0% to UAH 3,148). At the same time, versus January 2013, the nominal wage grew by 4.9%.

Against the backdrop of the growth, there was observed an increase in the real wage (versus January 2013, up by 4.6%). As of 1 February 2014, arrears of wages made up UAH 807.9 million, being 19.6% as little as at the respective date of 2013.

Change in agricultural output (as progressive total from the beginning of the year)

Arrears of wages in some economic activities (at the end of the reporting period)

Source: Bulletin of the National Bank of Ukraine

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