KIEV, May 6 – Ukraine’s consumer prices rose sharply in April, breaching the 30% threshold when measured over the past 12 months and pushing inflation to the highest level over the past 10 years, released data show.
The prices rose 30.2% in April from April 2007, bordering on the definition of hyperinflation, in a clear indication the government of Prime Minister Yulia Tymoshenko has been losing control over the situation.
The prices rose 3.1% in April from March, pushing cumulative inflation to 13.1% during the four months of January through April, according to the State Statistics Committee report posted Tuesday.
The figures, which were apparently spurred by massive social payments initiated by Tymoshenko since January, far exceeded the government’s original forecast of 9.6% inflation for the entire year of 2008.
The figures put mounting pressure on the National Bank of Ukraine to take strong action, from hiking key interest rates to letting the hryvnia appreciate rapidly against the U.S. dollar.
“We are standing at the threshold behind which the NBU would let the hryvnia half free float within the [currency trading] band,” Iryna Kryuchkova, a deputy economy minister, said in an interview with Kontrakty newspaper. “There is no other way out. Everyone understands that.”
The NBU met on April 24 to consider the idea of letting the hryvnia appreciate against the dollar, but had decided to postpone the matter indefinitely.
In comments earlier this week, the NBU blamed the government for the high inflation, specifically mentioning the massive social spending initiative that had aggravated rising costs of fuel and food.
The worsening inflation outlook may also resume calls within the office of President Viktor Yushchenko to remove those ministers that have been responsible for drafting and handling the government’s economic policy.
Yushchenko’s office already called for the dismissal of such ministers in March, but Tymoshenko had flatly rejected the idea.
Tymoshenko admitted last month the government had been failing to curb price increases, but said it needed three more months to get the situation under control. April data show little sign of improvement in tackling the problem, analysts said.
The Tymoshenko government has recently come under fire from the Yushchenko office for failing to keep consumer prices in check, but some government officials say the criticism has been making the situation worse.
“It’s important for politicians not to speculate over the issue of inflation because this has been artificially strengthening inflationary expectations,” Kryuchkova said. (tl/ez)