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NBU downgrades inflation forecast to 9.7% in 2024, 6.9% in 2025

The NBU Governor believes that the rise in food prices was largely driven by worse-than-expected harvests of various crops and the resulting increase in the cost of raw materials for the food industry.

NBU downgrades inflation forecast to 9.7% in 2024, 6.9% in 2025
Andriy Pyshnyy
Photo: Max Trebukhov

The National Bank of Ukraine (NBU) has downgraded its inflation forecast for 2024 from 8.5% to 9.7% and worsened it for 2025 from 6.6% to 6.9%, Interfax-Ukraine reports.

‘In the coming months, price pressure will continue due to the continued influence of factors from the food supply, the expansion of budget expenditures, high wage growth and an increase in the energy deficit during the heating season. As a result, inflation will reach 9.7% by the end of 2024,' NBU Governor Andriy Pyshnyy said at a press briefing on Wednesday.

According to him, in the spring of 2025, inflation will start to decline, which will be facilitated by the NBU's prudent monetary policy, the easing of external price pressure, an improvement in the energy sector and an increase in harvests.

He emphasised that the NBU's forecast envisages inflation falling to 6.9% at the end of 2025 and reaching the 5% target in 2026.

Pyshnyy added that in September 2024, inflation accelerated to 8.6% year-on-year and, according to the NBU, continued to rise in October.

‘The increase in price pressure in the second half of 2024 was expected and was foreseen in the NBU's previous forecasts (inflation reports for January, April and July 2024). At the same time, the growth in both consumer and core inflation (7.3% yoy in September) was higher than forecast,’ he said.

The NBU Governor believes that the rise in food prices was driven by worse-than-expected harvests of various crops and the associated increase in the cost of raw materials for the food industry.

In addition, the acceleration in inflation was also driven by further increases in input costs, including electricity and labour, and by exchange rate effects due to the hryvnia's depreciation in previous periods.

‘Price pressures will continue in the coming months, but inflation will begin to slow in the spring of 2025,’ the NBU Governor concluded.

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