You're reading: National Bank expecting zero inflation in August

The National Bank of Ukraine (NBU) is expecting zero inflation or slight deflation in August 2011 after 1.3 percent deflation was recorded in July this year, Valeriy Lytvytsky, the head of the group of advisors to the National Bank of Ukraine's (NBU) governor, has said.

"We are likely to see zero inflation in August, there is the possibility of deflation," he said at a press conference on Friday.

Lytvytsky said there was a 75 percent chance that inflation would be below 10 percent over the year.

"The prospects [for price dynamics] are positive. The harvest is good," he added.

As reported, in July deflation was recorded for the first time this year. Inflation in June was 0.4 percent, in May 0.8 percent, in April 1.3 percent, and in March 1.4 percent. Since the start of 2011, inflation has been 4.6 percent, with the annual forecast made by the government being 8.9 percent.

However, Lytvytsky noted that the authorities have to take additional measures to balance supply and demand on the market of meat products, fish and butter, as well as to prevent spikes in fuel prices.

In addition, according to Lytvytsky, the recovery of financial cooperation with the International Monetary Fund (IMF) and a balanced policy in the sphere of gas and housing utility tariffs will be important for inflation dynamics.

"I hope that an in-depth dialogue with the IMF will continue, and we will get [IMF loan] tranches by the end of the year. Of course, this will have a positive impact on inflation and currency exchange rate expectations," he said.