NBU: July inflation estimate confirms acceleration of inflation, trend will continue this year
Kyiv • UNN
The NBU Governor announced that inflation is expected to accelerate to 8.5% by the end of the year. However, thanks to the NBU's measures and the easing of external pressure, inflation will start to decline in 2025 to 6.6%.
The NBU predicts that inflation will accelerate, as evidenced by preliminary estimates of inflation in July, but will begin to decline next year. This was announced by the head of the National Bank during a briefing on Thursday, UNN reports.
Details
"After a long period of decline, inflation resumed growth in May and accelerated to 4.8% year-on-year in June. (...) Lower-than-expected food price dynamics offset a more significant increase in electricity tariffs for households," Pyshny said.
According to him, core inflation (5% yoy in June) was in line with the NBU's forecast, while underlying price pressures were increasing due to higher business costs for labor and electricity. The NBU also took into account the dynamics of certain components of the core consumer price index, which resulted in a weakening of the hryvnia exchange rate.
Inflation will accelerate further, but will start to decline next year. Price pressures will persist in the coming months due to further increases in business costs, higher excise taxes, as well as the effects of last year's bumper harvests and the negative impact of the summer drought on this year's yields. Preliminary estimates of inflation in July confirm its further acceleration
He emphasizes that inflation will remain moderate at 8.5% at the end of the year, due to the NBU's measures to protect hryvnia incomes and household savings from inflation and to ensure the stability of the foreign exchange market.
"The continued moratorium on raising utility tariffs for gas, heating, and hot water will also have a restraining effect on prices. The NBU's prudent interest rate and exchange rate policies, as well as the easing of external inflationary pressures, will help slow inflation to 6.6% in 2025. In 2026, inflation will return to the NBU's target of 5% amid the gradual normalization of the economy and further improvement in the energy sector," the NBU Governor said.
Recall
The National Bank of Ukraine has decided to keep the key policy rate at 13% effective July 25, 2024. This decision is aimed at ensuring the stability of the foreign exchange market and bringing inflation closer to the 5% target.
