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Author Topic: Cost of living in Ukraine  (Read 38559 times)

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Offline MND

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Cost of living in Ukraine
« on: August 15, 2010, 09:56:22 AM »
Has the cost of living in Ukraine gotten out of control.

Nat has been there for 6 weeks now and she says the cost of everything has now gotten ridiculous bread, milk, potatoes, bus fares, taxis, electricity, gas etc is up by at least 200% if not more compared to this time last year.
She says many people in her town just can not afford to pay the un-stopable price hikes on everything that are currently going on overthere especially on basic food items she says familys that live in the cities and dont grow there own food are really struggling at the moment.

Offline Manny

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Re: The Cost Of Living In Ukraine 2010
« Reply #1 on: August 15, 2010, 12:03:14 PM »
gas etc is up by at least 200% if not more compared to this time last year.

Isn't that because Ukraine was stealing gas from Russia's pipelines last year and now it is paying it back via a price increase?
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Offline Voyager

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Re: The Cost Of Living In Ukraine 2010
« Reply #2 on: August 15, 2010, 01:42:16 PM »
gas etc is up by at least 200% if not more compared to this time last year.

Isn't that because Ukraine was stealing gas from Russia's pipelines last year and now it is paying it back via a price increase?

No, I think it was because they were getting a cut-rate deal from Russia before, but gas & oil are now moving up to market prices.


Offline Manny

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Re: The Cost Of Living In Ukraine 2010
« Reply #3 on: August 15, 2010, 01:45:05 PM »
gas etc is up by at least 200% if not more compared to this time last year.

Isn't that because Ukraine was stealing gas from Russia's pipelines last year and now it is paying it back via a price increase?

No, I think it was because they were getting a cut-rate deal from Russia before, but gas & oil are now moving up to market prices.

Oh, is that the official line?  :chuckle:

Quote
"The Ukrainian side openly admits it is stealing gas and is not ashamed of this," Gazprom spokesman Sergei Kupriyanov said.

Quote
Alexei Miller, CEO of Gazprom, said on Thursday he wanted Ukraine to pay $418 per 1,000 cubic metres (tcm) of gas, compared with the $179.5 Kiev paid in 2008. Ukraine says the most it can afford to pay is $235.

Source
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Offline ecocks

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Re: The Cost Of Living In Ukraine 2010
« Reply #4 on: August 15, 2010, 01:59:11 PM »
gas etc is up by at least 200% if not more compared to this time last year.

Isn't that because Ukraine was stealing gas from Russia's pipelines last year and now it is paying it back via a price increase?

No, I think it was because they were getting a cut-rate deal from Russia before, but gas & oil are now moving up to market prices.

Oh, is that the official line?  :chuckle:

Quote
"The Ukrainian side openly admits it is stealing gas and is not ashamed of this," Gazprom spokesman Sergei Kupriyanov said.

Quote
Alexei Miller, CEO of Gazprom, said on Thursday he wanted Ukraine to pay $418 per 1,000 cubic metres (tcm) of gas, compared with the $179.5 Kiev paid in 2008. Ukraine says the most it can afford to pay is $235.

Source

Well that was Gazprom's official line at least. Ukraine's official version was that they were holding a reserve for leakage and interruptions. Still it's not like any of that was being stolen and used by the average citizen. Just as so many of the Russian firefighting planes were leased out to other countries when they were needed, some oligarch was probably profiteering by selling off the reserves. It happens.

My understanding in Ukraine is that prices on groceries are up but have been stable for the last few months and housing is still at a 5-7 year low. Utility prices are rising rapidly as the IMF requirements for reduced subsidies on utilities are implemented. Gasoline prices are rising as well.

Not too surprising given their government and the fatalistic stoicism of the population. It's easy to see why the Holodomar happened since they apparently just intend to follow, herd-like, in whatever direction the government tells them. Starvation, inflation, unemployment, forzen pensions, uncontrolled heating, no hot water for weeks at a time, if the government tells them it MUST be done then so be it.

Offline JeanClaude

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Re: The Cost Of Living In Ukraine 2010
« Reply #5 on: August 15, 2010, 05:43:57 PM »
Quote
Not too surprising given their government and the fatalistic stoicism of the population. It's easy to see why the Holodomar happened since they apparently just intend to follow, herd-like, in whatever direction the government tells them.

Other then peacefull protest, i dont see much difference in any other country in the West
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Online andrewfi

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Re: The Cost Of Living In Ukraine 2010
« Reply #6 on: August 16, 2010, 01:23:29 AM »
Quote
Not too surprising given their government and the fatalistic stoicism of the population. It's easy to see why the Holodomar happened since they apparently just intend to follow, herd-like, in whatever direction the government tells them.

Other then peacefull protest, i dont see much difference in any other country in the West

Is true.

But yes, I think we can safely discount the observations of our 'on the ground observer' if that observer is noting 200% increases in prices of food.
Ukraine consumer price inflation in 2009 was, as I recall, about 16% and is budgeted to be around 9% for 2010. So, prices will have gone up noticeably and some people's incomes will have fallen but there is no hyperinflation in Ukraine (often suggested to be cumulative 100% over 3 years).

"For what else is the life of man but a kind of play in which men in various costumes perform until the director motions them offstage?" -Erasmus

Offline TrevorM

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Re: The Cost Of Living In Ukraine 2010
« Reply #7 on: August 16, 2010, 03:14:36 AM »
During this year's annual sojourn to the Crimea to visit wifey's parents, it seemed to use that food prices were pretty similar to the UK, petrol half the price (but that's down to our thieving government and the amount of tax they put on it) and wifey bought a winter coat for £140, which again would be similar to the UK for the same quality.

Offline MND

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Re: The Cost Of Living In Ukraine 2010
« Reply #8 on: August 16, 2010, 04:48:59 AM »
Nat says that in her town south west of Ukraine everything has gone up between 2 to 4 times the price it was this time last year property is cheap but food, clothing, postage and many other things have skyrocketed.
So dont believe everything you read that Ukraines inflation is aroun 9-16% as she is there now and can see the difference its alot more than that.

Online andrewfi

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Re: The Cost Of Living In Ukraine 2010
« Reply #9 on: August 16, 2010, 09:36:27 AM »
OK, here's a simple sanity check for you. ;)

How much, and in what direction, has the Ukraine/Euro exchange rate shifted in the past 12 months?

If the Hryvna is now worth about 25% of what it was a year ago then your on the ground observer might be right. if less then she is not. This is simple. Exchange rates are about the relative price of money. If Ukraine has had 200% inflation (hyperinflation) then the exchange rate will have plummeted against the Eurozone where inflation is pretty low.

This is because if it takes 4 hryvnia to buy what cost 1 hryvnia one year ago then the value of the currency to investors and banks using, for example, the Euro will have fallen by the same kind of amount and so the exchange rate will have tumbled, assuming all else is equal.

Simples.

Here, to save me looking further is a piece from Wikipedia about Hryvnia/US Dollar. Not such a good comparison as the US DOES have inflation and the dollar is pretty volatile at the moment but you can see that in the period in question the ratio was actually pretty firm. Thus we can know that inflation is NOT at the levels suggested by our on the ground observer.

Quote
In the period from 21 April 2005 through 21 October 2008 the official exchange rate remained stable at around UAH 5/USD 1. Since then, the hryvnia abruptly lost one-third of its value, dropping to around UAH 7.5/USD 1 by mid-December 2008.[3] The hryvnia remained relatively stable through most of the first half of 2009, being valued at roughly 7.5-8 UAH/USD 1 over this period.[7] However, the hryvnia began a gradual depreciation in the 3rd quarter of 2009 to reach just under 9 UAH/USD by September, although this was followed by a quick appreciation to around 8.25 UAH/USD by the start of October.[7] Through the 4th quarter of 2009 and the start of 2010, the value of the hryvnia has held relatively steady at approximately 8.0-8.25 UAH/USD.[7]

http://en.wikipedia.org/wiki/Ukrainian_hryvnia#Exchange_rates

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Offline MND

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Re: The Cost Of Living In Ukraine 2010
« Reply #10 on: August 16, 2010, 10:39:12 AM »
It does not matter what the stats say on the internet my wifes family has been saying it for months now how everything has skyrocketed and Nat has been there now for 6 weeks and she confirmed it.
Be interesting to see what Chris says as i think he is over there at moment or not far away from travelling over, his wifes town is about 80KM 's away from Nats town.

Offline WestCoast

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Re: The Cost Of Living In Ukraine 2010
« Reply #11 on: August 16, 2010, 11:26:09 AM »
Andrew's explanation for price increases is a good generic explanation of of why costs rise but there can be other reasons that have little or nothing to do with exchange rates.  For example if the town that Schastlivyj's wife lives in is small and/or off the main transportation links costs will be higher and fluctuate more than costs in the main cities.  Any disruption in the transportation is going to be felt more intensely and sooner because of the limited access to the area.  If the town has unexpected increases in population or excessive demands for goods prices are going to increase dramatically.  

Lets also not forget about corruption in Ukraine.  Ukraine is not just corrupt it is the most corrupt country in its region (43/43) and one of the most corrupt countries in the world (162/179).  To give some reference as to how corrupt the 2010 Heritage Foundation - Wall Street Journal Index views corruption in Ukraine, it ranks Ukraine as "repressed" its most severe rating.  This rating is so bad that it is reserved for countries such as Libya, Burma, Liberia, Iran and North Korea and others.  All in all if the price increases can't be explained by normal economic indicators it's probably a good chance that corruption is to blame, which means that there is little the citizens in the area can do to lower prices.    

http://www.heritage.org/index/Ranking.aspx
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Offline bagalia

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Re: The Cost Of Living In Ukraine 2010
« Reply #12 on: August 16, 2010, 12:07:57 PM »
OK, I am not especially bright on the economics side but this question has bothered me for a couple of years now and I think I am finally seeing the answer.

I agree with all the info on the rise and fall of the griven. When the rate went from 5 to around 9 we got hit hard by Target as our business rental contract specified the equivalent of dollars. Our rent shot up almost double. The rates they talk about in wiki are correct (of course).

At the same time it is also true that most all prices in Kharkiv have gone up. Grammy is upset that her favorite candy went from 4 to 6 griven. The cost of everything seems to have gone up like that.

So I was always wondering why the dollar was jumping around in other places but staying level more or less in Ukraine. My Laura said it was corruption with the banks and others at that level. I also remember that some time ago there was a bank scandal with price fixing but I do not think the solution really fixed anything. I always thought the currency rates were pegged from an international level.

So I guess the answer is that there is a mix of currency manipulation by the banks along with a general upward trend in the market prices probably based on a downturn on profits due to the bad economy and maybe a bit of corruption also.

Scott
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Offline Jinx

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Re: The Cost Of Living In Ukraine 2010
« Reply #13 on: August 18, 2010, 06:41:59 PM »
 Nataly has told me the same thing, the cost of almost everything has gone up dramatically. She's been there over a month now and can't even see how people can survive on what they make compared to what things cost. The price of meat and fruit is especially ridiculous, she says it's 3-4 times higher than in California but I don't know how accurate that is.

Offline MND

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Re: The Cost Of Living In Ukraine 2010
« Reply #14 on: August 19, 2010, 12:25:10 AM »
Nataly has told me the same thing, the cost of almost everything has gone up dramatically. She's been there over a month now and can't even see how people can survive on what they make compared to what things cost. The price of meat and fruit is especially ridiculous, she says it's 3-4 times higher than in California but I don't know how accurate that is.

No She is right Nat says the same 3-4 x more dearer than Aus as well