In January 2025, prices increased by 1.2% month-on-month, the lowest growth in the last 5 months. At the same time, year-on-year inflation accelerated from 12% in December 2024 to 12.9% in January 2025, as prices rose by only 0.4% in January a year ago. This is evidenced by data published by the State Statistics Service, UNN reports.
Details
Actual inflation slightly exceeded the trajectory projected by the NBU in its January Inflation Report.
The main reason for the deviation of price dynamics from the forecast was a more significant increase in both administratively regulated prices for goods and services and the cost of market services due to further growth in production costs, as well as tax and regulatory changes.
The NBU expected inflation to accelerate in the first months of 2025 amid a low comparison base to last year, driven by both temporary factors (including a limited supply of food due to last year's poor harvests) and fundamental factors (including higher business costs for energy and labor),
At the same time, the NBU expects inflation to return to a steady decline in the second half of 2025, heading toward the 5% target over the policy horizon.
Slowdown in inflation will be facilitated by:
- tightening the NBU's interest rate policy and its measures to maintain a stable situation in the foreign exchange market;
- expanding the supply of food products after the new harvest arrives;
- narrowing the fiscal deficit;
- moderate external price pressure.
Recall
The NBU forecasts a decline in inflation to 8.4% in 2025 and 5% in 2026. Inflation is expected to peak in the second quarter of 2025, after which it will gradually slow down.