Inflation in Ukraine exceeded 15%: what caused it and is it really critical
12 May 12:52
OPINION
Annual inflation in Ukraine has again exceeded 15% for the first time in two years. This has caused concern among the population and businesses, but experts call for the figures to be assessed in the context of the war.
As economist Andriy Novak explained in an exclusive commentary to "Komersant Ukrainian", the current situation reflects deep structural shifts caused by martial law and changed conditions of economic activity.
The primary cause of inflation is the war. It has dramatically increased the burden on the state budget: spending on the army, defense, and military supplies. Of course, this generates additional demand for essential goods – food, medicines, household appliances – and thus pressure on prices,” emphasizes Novak.
Among the factors of inflation, the expert also highlights the growth of production costs: in particular, higher energy prices and higher excise taxes on certain groups of goods, such as alcohol and tobacco. As a result, these factors form the inflationary background that we are seeing today.
But everything is learned in comparison,” he adds, “Turkey has higher inflation rates, although it is not at war. Therefore, for a country in a state of large-scale war, which has lost about 20% of its territory, including industrial and agricultural regions, inflation at 15% is still a fairly moderate result.
As for the forecasts for consumer prices, the economist draws attention to regional differentiation.
“Due to the displacement of millions of IDPs, the population density in our regions has changed significantly. This affects local demand and, consequently, prices. Where demand is growing, sellers have an incentive to raise prices – and vice versa,” Novak says.
Another important point, according to the expert, is the experience of Ukraine in the 90s. Novak noted the following:
“We have already experienced periods of hyperinflation, when the rate of price growth was many times higher than today. Against this background, the current 15% is not a disaster. It is a challenge, but it is not unprecedented.
Assessing the prospects, Novak emphasized the importance of maintaining macro-financial stability, public finance reform, and prudent monetary policy by the NBU.
Read also: Industrial inflation reached 52%: what it means for business and consumers
Prices are rising: annual inflation in Ukraine has reached its highest level since 2023
In April 2025, annual inflation in Ukraine amounted to 15.2%, the highest since the spring of 2023.
Such dynamics has already caused concern among consumers and economists alike, as it signals an increase in price pressure in a difficult economic situation.
In April 2025, the highest inflation rates were recorded for eggs (74.6%, accelerating from 44.7% in March), electricity (63.6%, stable due to the tariff increase in June 2024), and vegetables (35.8%, accelerating from 32.3% in March).
In April, core inflation was 0.4% for the month, but slowed to 12.1% year-on-year, the first time this figure has declined in 14 months.
The main reasons for the growth
First of all, inflation was pushed up by a rapid rise in food prices. According to official data from the State Statistics Service, food prices rose by 1.8% in April compared to March. Pork (7.9%), fruit, poultry, sugar and bread were the most expensive products. Newly harvested vegetables, such as cabbage and cucumbers, also saw a significant rise in prices due to a delay in the start of the season.
Prices for alcoholic beverages and tobacco products increased by 1.3% due to a 2.2% rise in tobacco prices. Transportation services fell by 0.3% due to a 2.2% decline in fuel and oil prices, although road and rail fares increased by 0.9% and 0.8%, respectively.
In addition, rising business costs, including electricity, logistics, and labor, forced manufacturers and suppliers to reconsider their pricing policies. At the same time, strong consumer demand, especially in large cities, remained a factor supporting price growth.
Another important factor was the weakened hryvnia. This raised the prices of imported goods and components, which affected the cost of production, even for Ukrainian goods.
The National Bank of Ukraine responded by raising its key policy rate to 15.5% in March. This decision was aimed at curbing inflation expectations and making loans more expensive, thereby limiting excessive liquidity in the economy. In addition, the NBU stated its readiness to continue to respond harshly to price risks if the pressure does not abate.
According to the regulator’s forecast, inflation will begin to slow in the second half of the year, and may return to single digits by the end of 2025, unless new external shocks arise. Improvements in the energy sector, the stabilization of the hryvnia, and lower prices for certain products during the harvest season should play a positive role.
However, experts warn that inflationary risks remain high due to military spending, global instability, and domestic budget deficits. A comprehensive approach is needed to curb prices – not only monetary instruments, but also tax, agricultural and social policies.
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