Prices for raw foods to rise in the second half of the year due to lower harvest - NBU
Kyiv • UNN
In the short term, raw foods will remain cheaper than last year, but prices will rise in the second half of 2024 on the back of lower harvest expectations, while prices for processed foods will also accelerate slightly.
Raw foods are expected to remain cheaper than last year in the near future, but prices will rise in the second half of the year. The growth in prices for processed foods will also accelerate somewhat. This is stated in the NBU's inflation report, UNN reports.
Details
In the coming months, inflation is expected to remain low, but will turn toward a moderate acceleration. In the second quarter, it will return to the NBU's target range of 5% ± 1 pp, and temporarily exceed it in the second half of the year. This will be due to pressure from business labor costs, further recovery in consumer demand, and the exhaustion of the effects of the previous year's significant harvests and this year's mild winter, the NBU said.
In the short term, raw foods will still remain cheaper than last year. However, in the second half of 2024, prices for these products will rise amid a low comparison base due to a smaller expected harvest. The growth in prices for processed foods, which are included in the core consumer price index, will also accelerate somewhat. In the coming years, food inflation will return to a low level (3-4% per year) due to a gradual increase in food production, as well as lower global food prices
Overall, the NBU has improved its inflation forecast from 8.6% to 8.2% for 2024. According to the NBU's forecast, inflation will moderately accelerate in 2024 (to 8.2%), but will decline to 6% next year and 5% thereafter.
Fixing tariffs for certain housing and communal services, including gas, hot water, and heating, as indicated, remained a significant factor in curbing the administrative component of inflation. "However, in the context of further normalization of the economy and given the difficult state of the energy system, tariffs for housing and communal services are expected to gradually be brought to market-based levels," the NBU said
This is expected to be a significant pro-inflationary factor. A further increase in excise taxes on tobacco products as part of Ukraine's European integration commitments will also make a significant contribution to the administrative component of inflation, the NBU added.
The NBU has improved its inflation forecast to 8.2% for 2024Apr 25 2024, 12:38 PM • 17851 view
