Ukraine expected to bring inflation down to 5% target in 2019-Reuters Poll

FILE PHOTO: A woman uses an ATM machine as people walk past in central Kharkiv, Ukraine September 18, 2018. Picture taken September 18, 2018. REUTERS/Gleb Garanich

KIEV (Reuters) - Tough monetary policy and a strong currency helped Ukraine bring its annual inflation down to the central bank’s target of around 5% in 2019, the lowest rate of price rises in six years, a Reuters monthly poll of analysts forecast on Wednesday.

The survey suggested inflation had hit 4.8% in 2019 and is expected to stand at around 5.2% in 2020, close to the central bank’s mid-term goal of around 5%. Ukraine’s government statistics service plans to publish its official data this week.

Analysts at the brokerage ICU said inflation had slowed down thanks to a strengthened currency, low global oil and gas prices and a bumper harvest.

The Ukrainian hryvnia strengthened 18% in 2019, backed by a $5 billion inflow of foreign investments in Ukrainian bonds and a more than 30% rise in grain exports.

Ukraine harvested a record 74 million tonnes of grain in 2019.

“In 2020, low energy prices, coupled with rigid fiscal policies and still-high interest rates, will continue to hold back consumer prices,” they said in written comments.

The fast growth of consumer prices had been a key problem since Ukraine plunged into turmoil following Russia’s annexation of Crimea in 2014 and the outbreak of a Moscow-backed separatist conflict in the eastern Donbass region.

Ukrainian inflation jumped to 24.9% in 2014 and 43.3% in 2015 from 0.5% in 2013. The central bank gradually brought it down to single digits – 9.8% in 2018 - and has targeted 5% in 2020.

Reporting by Natalia Zinets; editing by Matthias Williams, Larry King