Market Update 9 WFP Ukraine Content Macroeconomic overview

Market Update 9 WFP Ukraine

Content - Macroeconomic overview - Food Access and other social indicators (utilities, financial sector, poverty etc. ) - Food Availability in NGCA - Food prices and market trends in the Donbas

Macroeconomic overview Graph 1: Dynamic of GDP (% to previous year) 8 6 4. 1 5. 5 4 0. 2 2 0 -2 2010 2011 2012 0 2013 2014 2015 The Ukrainian economy is still struggling; however, some early signs of recovery were seen in the last two quarters of 2015. -4 -6 -8 -10 -12 Graph 2: Dynamic of quarter GDP (% to the previous quarter with seasonally adjusted data) -6. 6 -9. 9 In February 2016, for the first time in 3 years, the y/y industrial production increased by 7. 6% breaking a long trend of decline. 2 1. 1 1 0 I II -1 III IV I 2014 -1. 4 -2 -3. 5 -3 -4 -5 -6 -4. 1 -3. 3 -4. 2 -4. 7 II III 2015 1. 4 IV

Inflation Graph 3: Inflation Dynamic during 2014 -2016, year to year % In March, inflation slowed to 20. 9% y/y. 70 60 50 Since the beginning of the year prices increased by only 1. 5%, which is lowest value for this quarter in the last two years. 40 30 20 10 4 g 14 Se p 14 Oc t-1 4 No v 14 De c 14 Ja n 15 Fe b 15 M ar -1 5 Ap r-1 M 5 ay -1 5 Ju n 15 Ju l-1 5 Au g 15 Se p 15 Oc t-1 5 No v 15 De c 15 Ja n 16 Fe b 16 M ar -1 6 4 Au -1 l-1 Ju 4 -1 Ju n 4 ay M r-1 Ap M ar -1 4 0

Economic situation in Donetsk and Luhansk oblast (GCA) Industrial production dynamic during 2014 -2016, year to year % 0 In February 2016, industrial production in Donetsk oblast increased by 26. 9% and in Luhansk oblast by 149% compare to February 2015. -10 -20 6. 40000001 5. 40000001 2012 2013 -7. 5 8. 90000001 2014 2015 -31. 5 -30 -34. 6 -40 -42 -50 -60 -70 The highest unemployment rates in Ukraine can be observed in the Donetsk and Luhansk GCA oblasts at the levels 13. 6% and 15. 4% respectively. Donetska -66 Luhanska Unemployment rates, % 18 16 14 12 10 8 6 4 2 0 2011 2012 2013 Luhanska Donetska 2014 2015

Utilities prices in NGCA Prices in NGCA are lower compared to those in National Ukrainian for all the services. For example, the cheapest tariff for electricity in GCA is around twice the price and for gas 3 to 5 times higher. This data suggests that subsidized utility tariffs in NGCA allow households to spend more on food.

Price monitoring points

Food availability in NGCA Calendar for Luhansk NGCA Market 2015 Commodity Jun Rice Wheat bread Rye bread Wheat flour Pasta Buckwheat Potato Beef Pork Poultry Boil. sausages Eggs Butter Sunflower oil Pork fat Milk Sour cream Curd Cabbage Carrot Beetroot Onion Sugar Availability Key Jul Calendar for Donetsk NGCA Market 2016 Aug Sep Oct Nov Dec Jan 2015 Feb Mar Jun Jul Trends 2016 Aug Sep Oct Nov Dec Jan Feb Mar Widely Available (available in 90 - 100% of all monitoring shops) Not Widely Available (available in 50 - 89% of all monitoring shops) Sparsely Available (available in 11 - 49% of all monitoring shops) Not available (0 -10%) Staples are widely available for almost all the year. Beef is sparsely available during all periods. There is limited availability of pork and pork fat on the market. No significant differences in the food availability in Donetsk and Luhansk NGCA were identified.

Food basket trends Graph 4: Ukraine (National) value of food basket, UAH 750 700 650 666. 4 600 550 500 [VALUE] 450 -1 6 M ar 16 b. Fe 16 n. Ja 15 c. De v 15 No t-1 5 Oc 15 p. Se 5 15 Au g- l-1 Ju n 15 Ju -1 5 ay 5 M r-1 Ap -1 5 M ar 15 b. Fe 15 n. Ja 14 c. De v 14 No t-1 4 Oc 14 p. Se 4 14 Au g- l-1 Ju n 14 Ju -1 4 ay 4 M r-1 Ap M ar -1 4 400 The central reason for food deflation can be explained by supply factors, which led to lower prices for raw food items. This was mainly caused by reduced export opportunities for domestic producers.

Graph 6: Cost of Food Basket in NGCA 1100. 0 1000. 0 Donetska (NGCA) 900. 0 800. 0 700. 0 600. 0 Luhanska (NGCA) 500. 0 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 400. 0

Price differences in GCA and NGCA (March 2016) Commodity Rice Wheat bread Rye bread Wheat flour Pasta Buckwheat grits Potato Beef Pork Poultry Boiled sausages Eggs Pork fat Butter Sunflower oil Milk Sour cream Curd Cabbage Carrot Beetroot Onion Sugar Food Basket (full) GCA 17 10 10 8 10 30 6 80 65 37 55 12 43 105 30 12 32 72 10 11 9 8 15 666 NGCA 22 8 9 7 10 27 7 133 106 47 59 20 83 101 32 17 51 81 8 9 8 8 20 821 Comparison (NGCA compared to GCA) 134% 78% 89% 82% 100% 91% 118% 165% 164% 127% 107% 168% 194% 96% 107% 135% 161% 112% 84% 83% 90% 97% 133% 123% Sugar 15 20 8 8 8 9 9 11 8 10 Onion Beetroot Carrot Cabbage Curd Sour cream Milk 12 51 32 17 81 72 32 30 Sunflower oil Butter Pork fat Eggs 12 83 43 20 NGCA Boiled sausages Poultry 37 101 105 47 59 55 Pork GCA 106 65 Beef 7 6 Potato 27 30 Buckwheat grits 10 10 Pasta 7 8 9 10 8 10 Wheat flour Rye bread Wheat bread Rice 17 0 133 80 20 22 40 60 80 100 120 140

World Food Programme