The National Bank of Ukraine states that a rapid slowdown in inflation could be curbed by higher security risks and further war-related devastation.
Inflation in Ukraine slowed down in July 2023 due to the favorable situation in the foreign exchange market. This is stated in the comments of the Central Bank.
It was noted that prices in Ukraine fell by 0.6% last month. At the same time, the actual rates of price growth were lower than the NBU’s forecast trajectory.
“The rapid decline in inflation was due to the large supply of raw food products, as well as a reflection of the positive situation in the foreign exchange market and improved inflation expectations in the prices of certain goods, especially imported ones,” the statement says. .
The Central Bank added that on an annual basis (annual) consumer inflation continued to slow down to 11.3% from 12.8% in June. Monthly deflation was last recorded in August of the previous year.
How have prices changed in Ukraine?
price increase processed food products, according to NBU, continues to slow down (to 13.9% per year). The Central Bank believes that this process is closely related to the further reduction of pressure from operating costs, particularly raw materials and energy, and further adjustment of production and logistics chains, as well as the improvement in inflation expectations. stable situation in the foreign exchange market.
“The stability in the exchange rate contributed to the slowdown in the rate of increase in prices of products that have a significant share in the cost of imports: among them: fish products, chocolate, coffee, juices, dried fruits, soft drinks and spices,” NBU said. says.
Height prices of non-food products on the back of the positive situation in the foreign exchange market, it slowed down (up to 10%) due to improved inflation and exchange rate expectations. As a result, there was a slight increase in prices among goods:
- personal care;
- clothing and shoes;
- toys;
- furniture;
- household appliances;
- home stuff;
- cars.
At the same time electronics prices decreased from year to year.
growth rates service charge also decreased (to 12.4% per year). The prices of cafes and restaurants increased more slowly due to the stable situation in the foreign exchange market and the reduction of pressure from operating costs. The cost of medical, veterinary, tourist services, car maintenance, repair, gym, hotel and hairdresser services practically does not increase in price.
price increase rates for eat raw fell to 12.3%. Grains and flour are becoming cheaper due to lower export prices, significant grain stocks and increased production. vegetable prices Slowing growth due to expansion of supply, now the cost is closer to last year’s figures.
Also because of the bigger offer more moderate prices for eggshowever, given the high pace of exports, the price level is still above last year’s level.
At the same time meat adds value due to the decrease in supply and the increase in fuel prices against the backdrop of adverse weather conditions. Moreover fruit prices increased primarily at the expense of watermelons, due to the lack of supply.
to reject gasoline prices slowed to 10.6% per year. Reason: Return of VAT and excise tax rates to pre-war levels. At the same time, the increase in fuel prices was constrained by the following factors:
- fall in world oil prices;
- substantial fuel stocks purchased to raise excise tax;
- increased competition in the retail market.
“Inflation is slowing further due to expansion in the supply of raw food products and improved prospects while maintaining exchange rate stability. The latter was mainly due to the consistent monetary policy of the NBU aimed at maintaining stability. The attractiveness of hryvnia savings,” comments the comment.
Inflation in Ukraine is expected to rise to 10.6% by the end of 2023 and fall further to 8.5% in 2024. However, the risks of increased inflationary pressures remain, mainly due to higher security risks weighing on expectations as well as further war-related disruption.
Recall, on August 10, the Chairman of the Tax Committee of the Verkhovna Rada of Ukraine, Daniil Getmantsev, said that the trend of slowing down the inflationary processes in Ukraine will continue in the last month of the summer of 2023. According to him, annual inflation will fall below 10% in the coming months.
Moreover Focus He explained how much the cost of utilities in Ukraine has changed. According to the State Statistics Service, the price of a shared flat increased by a total of 4.3% during the year (September 2022 – September 2021).
Source: Focus
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