Fundamental inflationary pressure increased slightly in April - NBU

The actual rates of price growth were somewhat lower than the trajectory of the National Bank's forecast published in the Inflation Report for April 2024 (3.6% y/y).

This is stated in the message of the National Bank of Ukraine (NBU), Ukrainian News Agency reports.

Deviations from the forecast continued to be provided by the dynamics of little-forecasted factors of a temporary nature, first of all, a sharper drop in the prices of raw food products.

This is due both to the effects of this year's warm weather and less pressure on business costs due to the cheapening of raw materials under the influence of last year's significant harvests, and to the reorientation of producers to the domestic market due to the blockade of the western borders.

Instead, fundamental inflationary pressures, which are most influenced by monetary policy, persisted.

In April, core inflation rose to 4.4% y/y, which was generally in line with the NBU's forecast.

On the one hand, secondary effects from lower prices of raw food products and improved inflationary expectations restrained fundamental inflationary pressures.

On the other hand, the increase in business costs for labor and the increase in import prices due to the blockade of the western borders put upward pressure on consumer prices.

In April, the decrease in annual inflation stopped, and the fundamental inflationary pressure - as expected, increased slightly.

The National Bank predicts that consumer price growth will accelerate moderately in the coming months as the effects of last year's larger harvests and this year's warm weather wear off, higher business labor costs and a rise in the administrative component of inflation.

At the same time, inflation will be restrained by a decrease in external price pressure and monetary policy measures, including maintaining a controlled situation on the foreign exchange market and protecting population savings from inflationary depreciation.

Monetary policy will continue to aim to keep inflation at a moderate level this year and return it to the target range of 5% ± 1% pp in the following years.

As Ukrainian News Agency earlier reported, in April 2024, consumer prices rose by 0.2%.

In January-April 2024, inflation was 1.4%.