OREANDA-NEWS. January 14, 2013. Mr. Oleksandr Petryk, Director of General Economic Department, has communicated that inflation stood at 0.2% in December 2012, with annual CPI inflation having declined by 0.2% for the first time in the past ten years. He explained that it had resulted from high supply of food and a fall in food prices, in particular, prices for fruit and vegetables (by 22.5%), sugar (16.8%), eggs (-19.7%) and others.

Mr. Oleksandr Petryk said that a fall in food prices could be explained by the rich harvest gathered in 2012, improved infrastructure, food storage and marketing facilities. Therefore, a negative contribution to the overall inflation rate stood at 1.4 p. p. Other consumer basket components demonstrated moderate growth

“Overall, out of 335 components included in the consumer basket of goods and services, prices for 307 components (92%) fluctuated within a range of -1% to +1%”, said Mr. Oleksandr Petryk.

During 2012, the core inflation demonstrated moderate growth, with annual core CPI inflation standing at 0.8%.

During 2012, thanks to a stabilization in the world oil prices, fuel price growth slowed down to 6.9% year-on-year compared with the previous year (30.9%), having declined by 0.2% in December.

Prices for administratively-regulated goods and services showed moderate annual growth (3.2%), which was driven by price increases for alcoholic beverages and tobacco products. Housing maintenance and utility tariffs grew at an annual rate of 0.7%, having increased by 0.2% in December due to a 1.0% rise in the heating tariffs.

December saw a continuation of the downward trend in the producer prices, which started in September 2011, standing at over 30% per annum. By the end of 2012, the producer prices had fallen to 0.3%.

Mr. Oleksandr Petryk believes that the above is a reflection of global trends, as Ukraine has an open economy and prices for most goods and services depend on the situation in global markets. Therefore, a fall in prices for metals, mechanical engineering products, and chemical industry products drove the producer prices down.

“Overall, in 2012 the National Bank of Ukraine succeeded in fulfilling its main function stipulated by the law – ensuring price stability, which could lay the foundation for the fast economic growth once the structural reforms have been implemented,” said Mr. Oleksandr Petryk.