Inflation in Ukraine may reach 3-4% - EBRD  5 February 2013 17:46  3029726 030312

EBRD expects increase of the inflation in Ukraine in 2013 because of increasing tariffs on energy resources and an increase in the exchange rate flexibility. This was stated by the senior economist of the EBRD on Eastern Europe Alex Pivovarsky, informed "Interfax-Ukraine".

"We expect some increase in inflation - as much as several percent. We expect three or four percent, on average. Mainly due to an increase in tariffs," - he said.Talking about the increase of the exchange rate flexibility, the bank economist said that such more modern policy would be advantageous for Ukraine, which is confirmed by the experience of Russia.

In his opinion, in Ukraine there may be a negligible devaluation, because the external environment for the country has not been very advantageous which, in the market conditions, creates pressure on the hryvnia. However, he said that the EBRD does not forecast a rate of the hryvnia.

Pivovarsky added that the inflation depends on international factors, such as prices for resources and food. "I think that current situation when inflation is negative is not an advantage. It is good that inflation was stopped. But it also suggests that the monetary policy is very strict, and this is evidenced by the absence of crediting in the banking system" - the expert said.

The economist also suggested that the risk of sharply accelerating inflation, its return to double indices is very small."So far the monetary policy is very strict and the fiscal one, in contrast, is less strict than the IMF would like it to be. If the fiscal policy remains as it is now, and the money policy becomes more flexible, it is likely that the inflation will increase a little, since the rate will be more floating," - the representative of the EBRD said.

According to him, the National Bank may carry out tight monetary policy and maintain the rate for one more year, but it increases the probability of crisis in the future, because reserves are lost, ecomomic base is not renewed, investments are reduced, the level of trust of the population is also reduced.

Tags: inflation

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