The National Bank of Ukraine predicts a moderate increase in inflation in the coming months, but expects prices to stabilize next year. NBU Chairman Andriy Pishnyi said this during a briefing, noting that inflation will increase due to several key factors, but will gradually return to the target level of 5%.
The main reasons for the increase in prices in the coming months are the expansion of aggregate demand due to the increase in budget expenditures, the increase in business costs for labor and electricity, as well as the increase in excise taxes. However, Pyshnyi emphasized that the balanced monetary policy of the National Bank and the reduction of external price pressure will help to slow down inflation.
Accounting rate and inflation
The Board of the National Bank decided to keep the discount rate at the level of 13%, which, according to the head of the NBU, will contribute to the gradual return of inflation to the target level of 5% in the coming years. This decision also supports the stability of the foreign exchange market, which is an important element for controlling inflationary processes.
According to the State Statistics Service, in August 2024, inflation accelerated to 7.5% on an annual basis, which is close to the forecasts of the NBU. Compared to July, inflation increased by 0.6% in August, and by 4.9% since the beginning of the year.
What has increased in price the most?
August showed a significant increase in prices for some products. The prices of eggs (by 7.1%) and vegetables (by 5.2%) increased the most. At the same time, fruit prices decreased by 7.4%. The increase in consumer prices in August is due to this year's worse harvests, rising costs of food raw materials, energy, wages, and the impact of the weakened hryvnia exchange rate.
Forecasts for the future
Despite the short-term increase in inflation, the National Bank expects that it will gradually decrease to the target of 5% in the coming years. This will be achieved thanks to the reduction of external price pressure, control over the currency market and stabilization of the economic situation in the country.
