NBU Governor outlined the reasons for accelerating inflation

The relevant statement was made by Andriy Pyshnyy, President of the National Bank of Ukraine (NBU), at a meeting. briefingA Ukrinform correspondent reported.

“According to NBU’s estimates, inflation rose to 8.6% on an annual basis in September and continued to rise in October. The increase in price pressure was expected in the second half of 2024, which was also reflected in the NBU’s previous forecasts (Inflation Report for January, April and July 2024). “At the same time, growth in both consumer and core inflation (7.3% annually in September) was faster than forecast,” he said.

In his words, the key element of these dynamics was the increase in food prices following lower-than-expected harvests of different agricultural products and the subsequent increase in raw material costs of the food industry.

In addition, the acceleration in inflation was caused by the increase in production costs, such as electricity and labor payments, as well as the exchange rate effect of the weakening of the Ukrainian hryvnia in previous periods.

NBU expects the pressure on prices to continue in the coming months. At the same time, the inflation rate will begin to slow down from the spring of 2025.

“Pressure on prices will continue in the coming months as food supply factors, increases in budget expenditures, rapid wage increases and wider energy cuts during the heating season become more influential. As a result, inflation will reach 9.7% by the end of 2024,” Pyshnyy explained.

As predicted by the NBU, the inflation rate is expected to slow down from spring 2025. This will be driven by the NBU’s prudent monetary policy and weak external price pressures, as well as improvement in the energy sector and increased harvests.

“The NBU forecasts that inflation will fall to 6.9% by the end of 2025 and return to the 5% target in 2026,” Pyshnyy emphasized.

We would like to remind you that on October 31, 2024, the National Bank of Ukraine (NBU) approved the decision to leave the main policy rate unchanged at 13%.