Inflation in Ukraine will exceed 30% in 2022.
The head of the National Bank of Ukraine, Kyrylo Shevchenko, said this at a briefing on July 21.
“According to our forecast, the growth rate of consumer prices will exceed 30% at the end of 2022,” Shevchenko said.
He added that inflation in June rose sharply and reached 21.5% YoY mainly due to shocks caused by the war and due to global price pressures. The war led to the disruption of supply chains, a reduction in the supply of certain goods, an increase in business costs, the physical destruction of production facilities and infrastructure, as well as the temporary occupation of certain territories. The persistence of high energy prices and record levels of inflation in partner countries also significantly increased price pressure in Ukraine.
“As before, the administrative measures of the National Bank and the Government of Ukraine, primarily the fixing of the hryvnia exchange rate and tariffs for gas and heat, remained the key levers in curbing inflation. The adjustment of product supplies through the western borders and the excess supply of agricultural raw materials formed as a result of the blockade of sea ports also had a restraining effect on prices,” Shevchenko said.
He noted that the central bank’s basic forecast contained a number of assumptions, in particular, that in 2023 logistics would recover, business risks would decrease and harvests would gradually increase. Consumer and investment demand after the war will remain restrained for quite some time, which will also contribute to a slowdown in inflation in the years to come. On the other hand, keeping energy prices at high levels will prevent a more significant reduction in inflation and will require revision of housing and utility services tariffs to balance public finances.
“Taking into account the consequences of the war and the significant contribution from the increase in administrative prices, the National Bank expects inflation to decrease to 20.7% in 2023 and to 9.4% in 2024. Its return to the 5% target is expected in 2025,” Shevchenko said.
Consumer inflation in Ukraine accelerated to 18% in May from 16.4% in April. (Ukrinform/Business World Magazine)
