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Ukraine Inflation July 2023

Ukraine: Inflation falls to 17-month low in July

Inflation came in at 11.3% in July, down from 12.8% in June. July’s reading marked the lowest inflation rate since February 2022. The disinflationary trend was supported by lower price pressures for food, and housing and utilities. Moreover, prices for clothing and footwear declined. In contrast, transport prices rebounded from the previous month’s decline.

Meanwhile, the trend pointed down, with annual average inflation coming in at 21.5% in July (June: 22.4%). Additionally, core inflation eased to 12.3% in the past month from 13.7% in June.

Lastly, consumer prices fell 0.60% month on month in July, decreasing from June’s 0.79% rise. July’s result was the steepest fall in prices in three years.

Looking ahead, inflation should decline further through end-2023 on an increasingly tough base of comparison, lower external price pressures, Central Bank interventions and frozen utility tariffs. That said, accelerating domestic activity, higher fuel taxes and electricity prices for households, and the destruction of the Kakhovka dam in the south of Ukraine in early June will keep price pressures above the Central Bank’s 5.0% target until at least Q4 2024. Upside risks to the outlook include additional supply chain shocks and infrastructural damage due to Russia’s invasion, as well as a resurgence of global commodity prices.

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