Economy 2021-07-13T04:03:24+03:00
Ukrainian news
NBU Expects Inflation Slowdown In Autumn Due To Gradual Exhaustion Of Effect Of Low Comparison Base

NBU Expects Inflation Slowdown In Autumn Due To Gradual Exhaustion Of Effect Of Low Comparison Base

NBU, monetary policy, inflation

The National Bank of Ukraine (NBU) expects inflation to slow down in autumn due to the gradual exhaustion of the effect of the low base of comparison, a higher harvest and the stabilizing influence of monetary policy.

The NBU has said this in a statement, Ukrainian News Agency reports.

It is noted that in the coming months, inflationary pressures will remain significant, taking into account mainly temporary factors, in particular supply factors and the low comparison base of last year.

However, inflation will begin to slow down as early as the fourth quarter of 2021 and will return to the target of 5% in the first half of 2022.

This will be facilitated by the normalization of prices on world commodity markets, as well as the arrival of a new large harvest on the markets.

Restrained monetary policy of the National Bank should calm inflation expectations and ease fundamental inflationary pressure on the impact horizon (9-18 months), including through the currency channel.

The main assumption, which the Board of the National Bank takes into account, remains the continuation of cooperation with the IMF.

IMF loans are an important source of financing the government budget deficit, as well as a positive signal for foreign investors.

Cooperation with the Fund and other international partners will contribute to a faster recovery of the Ukrainian economy from the consequences of the coronavirus crisis.

The spread of the COVID-19 pandemic remains a key risk.

On the one hand, new strains of the pandemic and the slow pace of vaccination in the country create risks of increased quarantine restrictions, as well as threaten with a decrease in business activity, consumer and investment demand.

This will contain inflation.

On the other hand, the gradual extinction of the pandemic may affect the implementation of deferred consumer demand, accelerate the recovery of business activity and, accordingly, accelerate the growth of consumer prices.

As Ukrainian News Agency earlier reported, in May, consumer inflation in annual terms accelerated to 9.5% (from 8.4% in April).

On a monthly basis, prices rose 1.3%.

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