Bad weather hit the economy in summer, risks to prices are growing – NBU
1 August 2025 15:46
Due to prolonged rains and cold weather in June and July, Ukraine faced a delayed harvest and lower yields. According to the National Bank, this has already hit the food industry and transportation, and may further affect prices, "Komersant Ukrainian" reports.
The National Bank of Ukraine warns that unfavorable weather conditions in the summer of 2025 have already had a negative impact on the agricultural sector. Due to rains and cold snaps in June and July, the start of the harvest was delayed, and harvest prospects deteriorated.
“Unfavorable weather conditions delayed the harvest and limited harvest prospects, which, along with the gradual depletion of last year’s crops, slowed down the food industry and transportation sector,”
– says the NBU’s July 2025 Inflation Report.
The National Bank notes that the food pressure on inflation is already noticeable: due to seasonal factors, overall inflation in June was higher than forecast, although core inflation continues to decline.
The regulator also points to increased risks in the coming months:
- a possible deterioration in yields more than expected;
- further growth in food prices;
- impact on inflation expectations of households and businesses.
“In July, a temporary increase in annual inflation is expected due to the exhaustion of the comparison base effect and the worse impact of the weather factor on food supply,”
– the NBU notes.
This has already been reflected in the structure of the economy: a less active food industry, weaker dynamics in transportation, and lower foreign exchange earnings from agricultural exports.
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The NBU’s forecasts are about flexibility
It is worth noting that the National Bank of Ukraine is quite flexible in its forecasts, as uncertainty in the geopolitical, macroeconomic, military and other situations create a fairly wide forecast field. Therefore, the NBU responds quickly enough to macroeconomic changes in the country and regularly adjusts its forecasts.
For example, last fall, the NBU expected inflation to start slowing down this spring. Then the inflation slowdown was postponed to the summer. The NBU also forecast inflation at 6.9% in 2025; in spring 2025, this forecast was adjusted to 8.7%, and now it is 9.7%. This spring, they hoped to return to the 5% inflation target in 2026, and now they hope to return to it in 2027.
Since inflation has not been falling as predicted by the National Bank, the predicted and even promised reduction in the key policy rate has not happened. Earlier, the NBU promised to cut it to 14% in the second half of 2025, but now it turns out that it will remain unchanged.
In addition, according to the NBU’s forecast, Ukraine’s GDP was expected to grow by 3.1% in 2025. Judging by this forecast dynamics, it can be assumed that the current forecast of 2.1% GDP growth will also not be entirely accurate.
At the same time, it is noticeable that the NBU’s forecasts do not come true for the worse, so the rare negative forecast mentioned in the news may turn out to be quite prophetic.
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