KIEV, June 11 – Prime Minister Yulia Tymoshenko’s government on Wednesday revised Ukraine’s 2008 consumer inflation figure upwards in a move that will automatically trigger greater budget spending before the end of the year.

The figure was revised to 15.3% in 2008, up from 9.6% that had been previously forecast, Oleksandr Turchynov, the first deputy prime minister, said.

The new figure will have to be agreed by the president and by the National Bank of Ukraine before the government finally approves it and submits respective budget amendments to Parliament.

Tymoshenko has been flatly refusing to revise the figure over the past three months apparently amid concerns the move would further spur social spending and aggravate inflation.

But President Viktor Yushchenko insisted that the government must revise the figure to compensate the poor people for the rampant consumer price growth so far this year.

Ukraine’s consumer price increases were especially bad this year due to a combination of several factors, including higher costs of food and energy, but also due to the government’s rampant social spending so far this year

Consumer prices rose 14.6% in January through May, but if measured on 12-month period the prices had increased 31.1% between May and May 2007, according to the State Statistics Committee.

The government’s new inflation forecast is in the lower range of what had been seen by independent analysts. The International Monetary Fund sees Ukraine’s inflation at 17.1% in 2008.

But even the latest revision of the inflation forecast is likely to trigger grater spending from the state budget, increasing such spending by about 30.4 billion hryvnias, or about 10%, by the end of the year, analysts said.

Ukraine’s overall spending in 2008 was forecast at 294.2 billion hryvnias in the consolidated budget, which includes spending by the central and local governments.

Analysts said that the steep increase in spending may provoke an increase in inflation again, which would make the situation even worse before the end of the year.

Petro Poroshenko, the head of the National Bank of Ukraine’s Council, the strategic policy body, said the government already accumulated 27 billion hryvnias on its accounts and the spending “could lead to sharp growth in prices.”

In this case, Poroshenko said, the NBU’s last month’s move to appreciate the hryvnia by 4% against the dollar, its major anti-inflation measure, would be offset.

He urged the government to spend the money only on the poor people to avoid consumer price spike.

But Tymoshenko on Wednesday was optimistic that the revision of inflation and spending will not have a major impact. She said consumer prices will be flat in June, mostly due to seasonal factos, such as increased supply of fresh produce.

“I believe the inflation will be close to zero,” Tymoshenko said in reference to monthly price hike in June. Ukraine’s consumer prices rose 1.3% in May, compared with 3.1% hike in April. (tl/ez)