OREANDA-NEWS. Data released by the State Statistics Service of Ukraine  suggest that following three months of deflation, headline inflation stood at 1.8% m-o-m in September 2016.

In annual terms, inflation moderated to 7.9%. The annual inflation reading was  in line with the NBU’s forecast published in the Inflation Report (July 2016) which  foresees a return of inflation to 12% y-o-y by the end of 2016. In particular, a further slowdown in core inflation and raw food inflation (to 6.3% y-o-y and  3.5% y-o-y respectively) contributed to the deceleration in annual inflation. The acceleration of  inflation (m-o-m) in September  was in line with the NBU’s forecast.

However, the increase in inflation came in below the NBU’s expectations. The deviation of actual inflation from the projected path was attributed to  lower-than-expected core inflation and a less significant change in raw food prices.  • Core CPI rose by 2.0% m-o-m in September, primarily driven by an increase in prices for clothing and footwear (by 10.3% m-o-m). According to the SSU methodology, changes in prices for clothing and footwear are not directly reflected in price statistics during March-August.

Accordingly, the cumulative changes in prices over this period were reflected in price statistics for September. However, an increase in these prices was lower than it was expected. Also, the costs of educational  services have risen significantly (by 5.3% m-o-m) due to a seasonal increase in the tuition fees for  secondary and higher education.  As expected,  the hryvnia depreciation, which occurred  in August-September,  continued to pass through to import prices, including prices for vehicles, pharmaceuticals,  medical supplies and equipment, as well as audio, photographic, and  information processing equipment.