Maintaining stability of foreign exchange market made it possible to reduce fundamental inflationary pressure in 2023 - NBU

The National Bank of Ukraine (NBU) reports that maintaining the stability of the foreign exchange market made it possible to reduce fundamental inflationary pressure in 2023.

This is stated in the message of the NBU, Ukrainian News Agency reports.

In December 2023, inflation remained at the level of November - 5.1% in annual terms.

In monthly terms, prices increased by 0.7%.

The sharp slowdown in inflation in 2023 is caused by a number of factors.

In particular, the NBU's set of measures to maintain the stability of the currency market made it possible to reduce the fundamental inflationary pressure.

This limited the growth of prices for a wide range of goods with an imported component and contributed to the improvement of inflation and exchange rate expectations.

The fixation of tariffs for individual housing and utility services restrained the growth of administrative prices.

Good harvests and a corresponding increase in food supply contributed to a significant reduction in food inflation.

These factors outweighed the effects of rising price pressures from business production costs due to higher electricity prices and higher wages.

Actual consumer inflation in December 2023 was below the National Bank's forecast published in the October 2023 Inflation Report.

Core inflation also slowed down significantly more than forecast due to the rapid adaptation of foreign exchange market participants to the regime of managed exchange rate flexibility.

The increase in the price of processed food products at the end of the year amounted to 5.9% y/y.

The further slowdown in their price increase in December is explained by the decrease in pressure from business expenses, primarily on food raw materials, as well as the controlled situation on the foreign exchange market.

An additional factor remained the difficulties with the export of food, including due to the blockade of the western borders.

At the same time, the impact of the blockade on goods mainly imported in this group, with the exception of certain dairy products, turned out to be comparatively smaller than on raw food products.

Slowed down the growth of prices for bread, flour and confectionery products, meat and fish products, coffee, tea, juices, dried fruits, spices.

The drop in sunflowerseed oil prices deepened.

Administratively regulated prices increased by 10.7% over the past year.

The growth rate of fuel prices by the end of 2023 was 2.7%.

As Ukrainian News Agency earlier reported, in 2023, consumer prices rose by 5.1%.

In December, inflation was 0.7%.

In November, inflation was 0.5%, core inflation was 0.3%.