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15.04.2010
Credit-Rating: No Reasons for High Inflation Rise
Credit-Rating does not expect substantial rise of inflation rates until primary factors constraining the inflation retain – i.e. low activity of real sector of economy, low lending activities of the banks (preliminary data show the amount of loan portfolios for both individuals and legal entities decreased in March by UAH5.2bn), restricting monetary policy of the National Bank (the mobilization of free liquidity in March was recorded at UAH23bn, with the growth of monetary aggregates being at 3%).
The prices for consumer commodities in March remain at the level of the previous month (the Consumer Price Index was at 100.9% in March). However, there occurred some price changes for certain products within the basket of goods, namely the prices for eggs and fruits rose by 8% and 7% respectively, and the prices for sugar decreased by 4%. Credit-Rating believes that the rising prices were driven by seasonal growth in demand. Apart from foodstuff products, the prices for tobacco goods rose by 5.4% in March (this growth YTD was recorded at 37%). The major factor for rise in prices was indexation of excise duties to the inflation rate. The Government may be anticipated to increase excise duties in order to gain more revenues to the budget.
Credit-Rating notes that the mix of consumer prices for gas, accommodation, water supply, electricity has not virtually changed and remained at the level of December 2009. According to Olga Shubina, Director of Credit-Rating’s Department of Rating Researches, the fact that the utilities prices have not been adjusted by the increased gas price in 2010 will lead to either increased losses of utility companies or to increased expenses of the Consolidated budget for covering tariff spreads.
In March the index of goods manufacturers was recorded at 103.0%. The major growth factor, as in previous month, was rise in prices in the following activities: coal mining and coke production (11% and 13% respectively), iron ore (4%). The Agency thinks that the rise in prices in the global commodities market with the increased consumption were the principal factors for rise in prices for Ukraine-made products.
The prices in petrol sector have also soared (4%). As around 90% of petrol products are of import origin (produced from imported oil or imported from abroad), the wholesale prices lags something behind the global trend. Although a sharp rise in Ukrainian petrol stations at March-end was prompted not by environment in the national market, which may indicate speculative growth.
Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1081 ratings. As at Apr. 1, 2010 the agency’s list of ratings includes 646 ratings: 502 in corporate, 98 in financial and 46 in municipal sectors.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and
analytic department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
