Economy 2023-11-15T04:54:03+02:00
Ukrainian news
Inflation Acceleration Continues In October - NBU

Inflation Acceleration Continues In October - NBU

NBU, National Bank of Ukraine, inflation, acceleration of inflation

According to preliminary estimates of the National Bank, the acceleration of inflation continues in October.

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

The main factors of inflation growth remain the consequences of Russia's full-scale war against Ukraine.

Among them are: the disruption of supply chains, destruction of production, reduction of supply of goods and services, increase of business costs.

Another proinflationary factor was the effect of transferring the official hryvnia to U.S. dollar exchange rate adjustment to prices.

Further growth of inflation in the world also affected prices in Ukraine.

At the same time, the actual price dynamics were expected and even slightly lower than the July forecast of the National Bank.

Fixing tariffs for housing and communal services and saturating the domestic market with fuel, along with maintaining its preferential taxation, restrained price growth.

The planned decrease in budget monetization, as well as additional measures by the National Bank to calibrate currency restrictions, contributed to a decrease in foreign exchange market pressure and accordingly restrained the deterioration of expectations.

According to the NBU forecast, inflation will reach about 30% this year, but in subsequent years it should slow down, provided that security risks and coordinated monetary and fiscal policy are expected to decrease.

However, such a rate of price growth can be considered quite moderate given the challenges of the largest European war since World War II and long-term inflation records in many countries of the world.

Price pressures and expectations will remain controlled, laying the groundwork for a gradual slowdown in inflation.

The National Bank expects that the rate of price growth will begin to slow from next year due to the gradual establishment of logistics and production, a decrease in global inflation and moderately tough monetary conditions.

This process will accelerate within the year given the effects of a high comparison base and the expected easing of security risks, which is a key assumption of the new forecast of the National Bank.

The latter will significantly reduce inflation expectations and risks for business, reduce production costs, establish logistics, including through Black Sea ports, and restore production capacity.

All this will lead to a further increase in supply and stabilization of consumer prices.

The government's weighted debt policy with the refusal to monetize the budget deficit will further improve inflation expectations.

Under the influence of relevant factors, inflation next year will slow to 20.8%, and for another year - below 10%.

A faster slowdown in inflation in subsequent years will be hindered primarily by the high cost of energy carriers, which will prompt a phased reduction of tariffs for housing and communal services to market levels.

As Ukrainian News Agency earlier reported, in September 2022 consumer prices increased by 1.9%.

In January-September 2022, inflation was 21.8%.