Inflation in Ukraine is accelerating: NBU forecasts 8.5% by end of year
2 August 2024 11:57
The National Bank of Ukraine reports an expected acceleration in inflation, which has approached 5% in recent months. This is stated in the inflation report of the National Bank of Ukraine for July, according to "Komersant Ukrainian"
“After a long period of decline, inflation resumed growth in May and reached 4.8% year-on-year in June. This dynamics deviates only slightly from the NBU’s forecast published in the April 2024 Inflation Report.
According to the NBU, lower-than-expected food prices offset a more significant increase in electricity tariffs for households. Core inflation in June was 5% year-on-year. Underlying price pressures were exacerbated by higher business costs for labour and electricity, as well as by the hryvnia’s depreciation.
The NBU expects inflation to accelerate further in the coming months. This is due to an expected increase in business costs, higher excise taxes, the exhaustion of the effects of last year’s bumper harvests, and the negative impact of the summer drought on this year’s crops. Preliminary estimates of inflation in July confirm the upward trend.
Nevertheless, the NBU expects inflation to remain moderate and reach 8.5% by the end of the year, according to the updated forecast. This will be facilitated by the NBU’s measures to protect hryvnia incomes and household savings from inflation and to ensure the stability of the foreign exchange market. An additional factor in restraining prices will be the extension of the moratorium on raising utility tariffs for gas, heating, and hot water.
The NBU predicts that a prudent interest rate and exchange rate policy and an easing of external inflationary pressures will help slow inflation to 6.6% in 2025. In 2026, inflation is expected to return to the 5% target amid a gradual normalisation of the economy and further improvement in the energy sector.
For more news, follow Kommersant Ukrainian on Telegram: https: //t.me/komersant_ukrainskyi.
