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Ukraine Inflation May 2023

Ukraine: Inflation falls to lowest level since March 2022 in May

Inflation came in at 15.4% in May, which was down from April’s 17.9%. May’s figure represented the lowest inflation rate since March 2022. Looking at the details of the release, price pressures for food, housing and utilities, and transport all moderated in May. Inflation moderated thanks to a strong base effect, as well as a robust fuel and food supply, a strengthening of the hryvnia cash exchange rate and a more stable energy sector. Subdued domestic demand will have dampened price growth as well.

In turn, annual average inflation fell to 22.9% in May (April: 23.3%). Meanwhile, core consumer prices were unchanged over the same month last year, matching April’s result.

Lastly, consumer prices increased 0.51% in May over the previous month, picking up from April’s 0.19% increase.

Looking ahead, our panel sees inflation moderating further through Q4 2023 on elevated interest rates, a fixed exchange rate regime and muted domestic activity. Nevertheless, war-induced supply chain shocks and infrastructural damage, such as the collapse of the Kakhovka dam threatening agricultural production, will keep price pressures above the Central Bank’s target range this year. Global commodity price swings and additional damage from the war pose upside risks.

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