Inflation in Ukraine is growing, but the NBU expects stabilization in 2025
8 November 2024 12:51
In September 2024, inflation in Ukraine accelerated to 8.6% year-on-year, and preliminary estimates by the National Bank of Ukraine (NBU) indicate that growth continued in October. This is evidenced by the data of the National Bank’s inflation report for October, according to "Komersant Ukrainian"
“A significant contribution to this trend was made by the rise in food prices due to worse-than-expected harvests of various crops and the associated increase in the cost of raw materials for the food industry. The acceleration in inflation was also driven by a further increase in production costs, including electricity and labor, and exchange rate effects due to the hryvnia’s depreciation in previous periods,”
– the NBU report says.
Thus, food inflation remains one of the main drivers of price increases due to the limited supply of certain types of agricultural products, especially after unfavorable weather conditions in the summer and fall of 2024. This led to higher prices for a number of vegetable, fruit, and livestock products. In addition, the weakening of the hryvnia in previous periods put pressure on prices, which affected the cost of imported goods.
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The NBU expects annual inflation in Ukraine to reach 9.7% by the end of 2024, remaining high in the first half of 2025 due to inflationary pressures from producers, continued electricity shortages, and rising budget expenditures. However, starting in spring 2025, inflation is expected to gradually slow down due to monetary policy measures, an improvement in the energy sector, and higher harvests.
According to the NBU’s macroeconomic forecast, inflation should decline to 6.9% in 2025 and reach the target level of 5% in 2026. To achieve this result, the regulator will pursue a prudent monetary policy that will help maintain currency market stability and controlled inflation expectations among economic agents.
