The shelling of energy infrastructure will have no significant impact on consumer price dynamics, but the shift of businesses to power generators could cause inflation to increase by 1-2% in 2023.
Yuliya Svyridenko, First Deputy Prime Minister and Minister of Economy of Ukraine, touched upon the issue at a briefing on December 22.
“Persistent power outages have and will have an impact on prices. When our energy infrastructure collapses, the cost of production also increases due to the shift from centralized sources of supply to generators. The resilience of people and businesses at the micro level and the rapid response of the government to solve issues create reasons to hope that the factor of change in Russia’s aggression towards energy infrastructure will have no decisive impact on the dynamics of consumer market prices. However, we predict that this transition of businesses to diesel and petroleum power generators may cause an increase in inflation by 1-2% in 2023,” Svyridenko said.
She assumed that based on the current situation, there was a high likelihood that the state budget for the next year would be amended.
“Since the adoption of the budget, the attacks on energy infrastructure have not stopped, critical infrastructure has suffered significant destruction. This undoubtedly affects the economy. It was previously estimated that the fall in GDP at the end of the year will be about 32%, now the outlook has worsened to the range of 33.2-33.5%. If the destruction of our energy infrastructure is powerful, then we cannot avoid a negative impact on the economy. Under one of these scenarios, there is a possibility that we will not be able to get on a positive growth trajectory next year, and at the end of the year we will have a slight drop in GDP. Then it will require correction,” said Svyridenko. (Ukrinform/Business World Magazine)
