Inflation in Ukraine

Ukraine - Inflation

Inflation comes in at highest level since February 2016 in October

Inflation rose to 26.6% in October, above September’s 24.6%. October's reading marked the highest inflation rate since February 2016. Looking at the details of the release, prices for food and non-alcoholic beverages increased at a quicker rate in October. Prices for housing, water, electricity, gas and other fuels also rose at a stronger pace. These accelerations more than offset transportation prices rising at a softer pace.

The trend pointed up, with annual average inflation coming in at 17.5% in October (September: 16.2%). Meanwhile, core inflation fell to 0.9% in October, from the previous month's 1.1%.

Lastly, consumer prices rose 2.49% from the previous month in October, accelerating from September's 1.90% increase. October's result was the highest reading since June.

Inflation has continued to surge due to the ongoing Russian invasion, which has led to supply chain disruptions, the destruction of production facilities, shortages of goods and services and higher production costs. In addition, price pressures have risen due to the indirect consequences of the war, such as the depreciation of the hryvnia and higher global commodity prices.

Looking ahead, the National Bank of Ukraine sees inflation reaching 30.0% by the end of 2022—marginally above the FocusEconomics Consensus Forecast of 29.2%—before slowing to 21.0% next year and to 10.0% in 2024. That said, the Bank’s prognosis is largely conditional on the resolution of security risks and the timely effects of monetary and fiscal policy. A prolongation of the war and additional significant damage to infrastructure and production facilities could delay inflation’s moderation.

FocusEconomics Consensus Forecast panelists expect inflation to average 19.7% in 2023, which is down 0.2 percentage points from last month’s forecast. For 2024, the panel sees inflation averaging 10.4%.