Inflation preview for Feb-12; Naftogaz and city of Lviv local bonds; govt bond auction preview

Economics: Inflation preview for Feb-12: further slowing expected
The State Statistics Committee of Ukraine is scheduled to release its official monthly report on headline CPI and PPI by late tomorrow. We expect February\'s MoM CPI to be 0.4-0.5%, which is slightly higher than the 0.2% MoM in December-January as the result of colder weather conditions that constrained supply of some goods to retail outlets. At the same time, CPI data for Feb-12 in Russia and Kazakhstan, the other main economies of the CIS, are reported to be up 0.4% and 0.4% from last month. If our forecast is accurate, Ukraine\'s YoY CPI should further decelerate from its current 3.7% YoY as of the end of Jan-12 to 3.2-3.3% as of Feb-12. In regard to PPI, we expect further disinflation in line with the anticipated slower global economic growth this year. As Ukraine\'s economy depends heavily on the export of steel, agriculture and industrial machinery, global commodity prices drive demand. In the chart below, the CRB commodities index 9% contraction year-on-year forecasts a further deceleration of Ukraine\'s PPI from 15.0% YoY in Jan-12 to 10.0% YoY in Feb-12.

Attached please find the complete report, which includes supporting charts and tables for all comments (PDF file: 12 pages, 1226KB)