KIEV, July 9 – Ukraine’s consumer inflation will probably hit 19% in 2008, not 15.9% as the government has predicted, Serhiy Teriokhin, a leading economist at Prime Minister Yulia Tymoshenko’s group, admitted on Wednesday.

The government had persistently refused to increase the forecast despite the pressure from President Viktor Yushchenko and the National Bank of Ukraine that insisted it was too optimistic.

The comments from Teriokhin, a former economy minister and a close ally of Finance Minister Viktor Pynzenyk, suggest the government has been aware the prices were likely to grow faster-than-forecast.

“Concerning the inflation indicator of 15.9% it’s very strained,” Teriokhin said in comments published by Unian news agency. “I analyzed price dynamics over the past six years and I’m more pessimistic. I think the [real inflation] will be at about 19%.”

The high inflation, which has been the biggest economic challenge for Ukraine since the start of the year, has been increasingly turning into a major political issue over the past several weeks.

The largest opposition group, the Regions Party, citing a major spike in consumer prices, has recently suggested holding a no-confidence vote in the government as soon as this week.

Teriokhin’s forecast is closer to the forecast made by Mykola Azarov, a former finance minister and a senior figure at the opposition Regions Party, who has predicted inflation at between 20% and 25% in 2008.

The International Monetary Fund sees Ukraine’s inflation at 17.7% in 2008.

Ukraine’s consumer prices rose 15.5% in January through June, suggesting the real inflation will probably exceed 15.9% predicted by the government.

Ukraine’s inflation, measured on an annualized basis, was reported at 29.3% in June vs. June 2007, making the figure the worst such indicator in Europe.

Analysts said the Tymoshenko government has been probably trying to forecast lower inflation in order to be more flexible with revenue collected and spending, because greater inflation forecast would require the government to spend more on compensating social payments for the poor.

“The government seeks to benefit from lowering the pace of inflation,” Yaroslav Zhalilo, an analyst with the National Institute for Strategic Studies, said. “At the expense of the so-called inflation tax, the government will be able to make the nominal GDP greater.”

Teriokhin said that Ukraine’s June inflation of 0.8% on the month was actually greater than the government had expected.

“We hoped that the pace of inflation in June will be lower,” Teriokhin said. “Let’s see how the economy is going to work in July and August.” (tl/ez)