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Ukraine Inflation March 2024

Ukraine: Inflation declines to lowest level since November 2020 in March

Inflation came in at 4.0% in March, down from February’s 4.5%. March’s result represented the weakest inflation rate since November 2020. Looking at the details of the release, prices for food and non-alcoholic beverages rose at a softer pace in March, while prices for housing, water, electricity, gas and other fuels rose at a largely steady rate compared to the previous month’s reading.

In addition, the trend pointed down, with annual average inflation coming in at 8.5% in March (February: 9.9%). Meanwhile, core inflation fell to 4.2% in March, from February’s 4.5%.

Lastly, consumer prices increased 0.50% in March over the previous month, accelerating from February’s 0.31% increase.

Goldman Sachs analysts Andrew Matheny and Johan Allen commented on the outlook:

“Our baseline forecast is for inflation to continue to come in weak this year and for the Hryvnia to gradually depreciate, which would allow the [National Bank of Ukraine] (NBU) to continue the cutting cycle at the same 50bp pace in upcoming meetings, down to +11.5% at year-end and a terminal +10% rate. However, with inflation continuing to decline further below the NBU’s target, growth coming in weaker-than-expected in Q4 and the Hryvnia recently strengthening against the USD, risks are skewed towards larger cuts in our view.”

EIU analysts said:

“The pace of disinflation will slow in 2024 as the one-off effects of a 2023 fall in food prices caused by export constraints disappear and economic growth picks up. We forecast annual average inflation of 5.5% in 2024, up from an end-year rate of 5.1% in 2023. […] Expansionary fiscal spending remains a risk, but the concentration of government expenditure in defence, the managed float in the first half of the forecast period, and the financing of deficits through aid and concessional loans will prevent a serious build-up of inflationary pressures in the wider economy.”

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