Submitted by Tyler Durden.
With Ukraine, according to President Poroshenko, on the verge of World War III, it appears the people of the divided nation face another all too familiar war… on their living standards. As Hyrvnia continues to collapse to record-er lows, Ukraine's Central Bank warns of further stress and FX (think USDollar or EUR) demand because the "population is in panic." With a 19.8% inflation rate last month and a 48% devaluation in the currency this year, Bloomberg reports the costs of imported goods from gasoline to fruit and from medicine to meat is soaring. One store-owner reflected that she "feels the hryvnia devaluation everywhere," and another noted "I can't imagine how people survive on a single pension. We can’t even go to the drug store. We try to use herbs instead."
The Central bank expects inflation to keep rising (having previously peaked at 10,256% in 1993 as the Soviet economy was dismantled). "Inflation is the same as the war," warns one analyst, "it may lead to protests if people blame the authorities for failing to conduct proper policies."
[Ukrainians] are cutting back because of this year’s 48 percent plunge in the hryvnia, a decline that’s eroded purchasing power. The inflation rate spiked to 19.8 percent last month as the currency’s slide boosted the costs of imported goods from gasoline to fruit.
Valentyna is thankful for the two pensions she and her husband share, even if Ukraine’s inflation shock means they’re no longer enough to buy medicine and meat.
“We have some potatoes, tomatoes and cucumbers from our dacha,” said the 72-year-old pensioner as she made her way through the city of Zhytomyr, a two-hour bus ride west of Kiev. “I can’t imagine how people survive on a single pension. We can’t even go to the drug store. We try to use herbs instead.”
“I watch the dollar rate all the time because for me it’s the best indicator of poverty,” said the 29-year-old mother of a son in first grade. “I buy less sweets and fruit because of the astronomical costs. We used to save some money. Now, we can’t save anything.”
It's gonna get worse…
Inflation will probably speed up to 25 percent this year, compared with the 19 percent forecast earlier, central bank Governor Valeriya Gontareva said today.
Ukrainians are no strangers to inflation. Price growth peaked at 10,256 percent in 1993 as the Soviet economy was dismantled. Having subsided, the rate jumped to 31.3 percent in 2008, shortly before the hryvnia last sank.
“I’m ready to tolerate the current economic situation as long as the war is on,” said Hanna Hryhoriyeva, 67, a teacher at a culinary college who backed the protests’ anti-corruption message. “I won’t go onto the streets tomorrow because of inflation and the devaluation but my patience isn’t infinite.”
Others are less understanding.
Valya, a pensioner who declined to give her last name, said she’d just bought 2 kilograms (4.4 pounds) of grain that should last a month, along with potatoes and beetroot from the market. While she doesn’t drink alcohol or smoke, she can’t afford the bus to visit relatives’ graves in the Lviv region.
“Glory to Ukraine?” said Valya, 76, referring to a slogan of the street uprising. “Glory for what? Higher prices? The war? We’re just tolerating the authorities.”
And may end badly…
“Inflation is the same as the war,” Valchyshen said. “It may lead to protests if people blame the authorities for failing to conduct proper policies.”
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Is it any wonder Poroshenko is talking up the war and hoping for more aid/loans from The West to subordinate his nation…
And then this happens…
- *MEDVEDEV, YATSENYUK TALKED ABOUT FINANCIAL-ECONOMY TIES
- Russian Prime Minister Dmitry Medvedev on Thursday held a phone conversation with Ukrainian Prime Minister Arseniy Yatsenyuk, the Russian government press service reported Thursday.
- “Medvedev and Yatsenyuk discussed issues of financial-economic cooperation between the two countries,” the statement said.