KIEV, Nov. 6 â€“ Ukraineâ€™s consumer prices skyrocketed 2.6% on the month in October, the highest monthly inflation over the past three years, mostly due to the hike in power and natural gas prices.
The figure boosted cumulative consumer price index increase to 8.7% in January through the end of October, dashing the governmentâ€™s hopes of keeping inflation below 10% in 2006.
The government has been originally predicting inflation at 8.7% in 2006, but natural gas prices hikes have forced the government to revise the forecast to about 10%.
However, the pace of consumer price increases recorded over the past three months suggests the inflation will exceed the forecast highlighting the governmentâ€™s failure to deal with the macroeconomic problem.
â€śOver the past 10 months, the inflation reached the level that had been forecast for the entire year,â€ť Viktor Pynzenyk, a former finance minister, said in comments Monday.
â€śSuch a high pace of consumer price increase demonstrates the governmentâ€™s failure to conduct adequate economic policy,â€ť Pynzenyk said.
President Viktor Yushchenko has urged the government last month to use â€śan arsenal of all [inflation-reducing] measuresâ€ť to keep inflation below 10% in 2006.
Throughout October, the government has been holding talks with oil companies trying to force them to reduce gasoline prices in a bid to slow down the inflation growth.
Also, the central bank pledged to pursue an extremely rigid monetary policy through the end of the year, in a bid to keep the consumer prices steady.
But the high consumer price increase in October shows that the governmentâ€™s and the central bankâ€™s anti-inflationary measures have been largely failing to hold the prices.
The International Monetary Fun, which believes the government should pay particular attention to combating inflation, predicted inflation at about 10% in 2006 and in 2007.
However, the latest consumer price hike suggests that the inflation will be much worse, perhaps reaching up to 14% in 2006, which may slow down economic expansion, analysts said. (nr/ez)