Inflation in July; liquidity back to lows, lifting rates and UAH; bond auction preview; UAH recovers

Economics: Inflation in July: Price indices in decline
July\'s inflation report showed that headline CPI was down by 0.2% MoM, and PPI slid by 2.9% MoM. In an on-year change basis, headline CPI remained in the deflation zone, albeit recovering from -1.2% YoY in June to -0.1% YoY in July. Food prices as a whole declined, thanks to vegetables. Utilities prices as a whole were stable, as electricity and natural gas tariffs are being frozen for the last year, and will continue to be till the end of 2012, due to politics, despite the fact that Naftogaz is bloated with negative profits and rising debt. PPI broadly declined across the industrial sectors, from mining to processing to utilities, underscoring the weakness in external.

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