Inflation in Ukraine has accelerated in recent months and is approaching 5%. However, it is forecast to continue to rise and start to decline next year.
During a briefing, Andriy Pyshny, Chairman of the National Bank of Ukraine, noted that thanks to the NBU's balanced interest rate and exchange rate policy, as well as the weakening of external inflationary pressure, inflation will be able to slow down to 6.6% in 2025. In 2026, inflation should return to the NBU's target of 5% against the backdrop of the gradual normalization of the economy and the improvement of the energy situation.
Andriy Pyshny also stressed that Ukraine's economic recovery will continue, although it will be limited due to the impact of the war, in particular due to significant damage to the energy system. In the first half of 2024, economic growth continued, but slowed down due to large-scale Russian attacks on energy infrastructure. Despite this, business has partially adapted to constant power outages, and the stable operation of the maritime corridor has supported economic activity.
“Despite the electricity shortage and lower harvests compared to last year, the NBU even slightly improved the economic growth forecast for this year – to 3.7%. This is due to better results in the first quarter and the expected expansion of budget incentives, as well as the development of distributed generation, in particular with the support of large-scale lending programs,” Pyshny noted.
According to the NBU Chairman, the gradual normalization of the conditions for the functioning of the economy, maintaining a soft fiscal policy, developing export routes, and revitalizing external demand will contribute to accelerating the growth rate of real GDP to 4-5% in 2025-2026.
According to the State Statistics Service, consumer inflation in Ukraine in June was 4.8% year-on-year, accelerating from 3.3% in May. Inflation in the consumer market in June compared to May was 2.2%, and since the beginning of the year it has been 4.3%.
According to the NBU's Macroeconomic and Monetary Review, consumer inflation accelerated in June due to the depletion of last year's harvest and the depreciation of the hryvnia. However, further declines in food prices were due to increased supply due to warm weather at the beginning of the year, as well as to last year's large harvest and producers' reorientation to the domestic market.
