KIEV, June 6 ??“ A State Statistics Committee report showing a sharp increase in consumer prices last month has prompted expressions of concern by President Viktor Yushchenko and government officials about a possible resurgence in consumer inflation in 2007.

In addition, severe drought conditions throughout much of the country are also likely to exert pressure on consumer prices of many foods, particularly bread.

The report said consumer prices rose by 0.6 percent in the month of May, compared to no change in prices in April and a rise of 0.5 percent in May 2006, Reuters reported.

Cumulative price growth in the first five months of 2007 was 1.9 percent, down from 2.8 percent in January-May of last year.

But the committee also reported a rise of 2.3 percent in producer prices, compared to 2.1 percent in April. That pushed cumulative growth over five months to 9.8 percent against 4.3 percent in the same period last year.

The committee said food product prices rose 1.0 percent in May, though it noted increases of 15.7 percent for fruit and 4.6 percent for vegetables. Non-food prices dipped 0.3 percent, with services for hot water and heating falling 4 percent

With the 9.8 percent cumulative producer price growth already well above the forecast consumer price inflation of 7.5 percent this year against 11.6 percent last year, and given the expected pressures on food prices expected as a result of the drought, most analysts think that consumer prices will soon follow suit and increase.

Economy Minister Anatoly Kinakh said he was satisfied consumer price rises were within forecast limits, but added: "We are concerned about the higher level of inflation in industry.

"Given the higher potential for price rises in industry, specific measures must be taken so that this does not spill over onto the consumer market," Kinakh told journalists after a cabinet meeting.

A long-running political crisis in Ukraine, pitting President Viktor Yushchenko against Prime Minister Viktor Yanukovich, has culminated in the calling of an early parliamentary election in September.

The prime minister told the cabinet meeting he had asked Kinakh to keep close watch on bread prices.

"The price of bread must not change," Yanukovich told the meeting. He promised "tough measures" to guard against price speculation if a severe drought now gripping southern Ukraine leads to a poor harvest.

"Those working in bread production are responsible people, but let us just say that now is the time to have a talk with them and let them know that the government has sufficient reserves and there will be no panic.

"We must ensure tough control over price markups which we have set at 15 percent, transport costs and similar," he said. (rt/ez)