Macroeconomic Forecast Ukraine

Ukrainian inflation reached a new two-year high in October, with consumer prices growing by 14.8% y-o-y, up from 14.4% and 14.2% in September and August respectively. Price growth remains elevated by sharp increases in food prices - 19.6% y-o-y in October - and wheat price growth of 35.2% y-o-y, on the back of food droughts affecting crop yields across most of central and south east Europe. We have therefore revised up our 2007-end inflation forecast to 12.5% y-o-y. Going forward, consumer price growth is set to average 10.5% y-o-y in 2008.

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