Slowing Inflation: What’s Happening with Price Increases in Ukraine in 2023
According to the latest reports from the National Bank of Ukraine, inflationary trends in the country are showing signs of slowdown, although new challenges remain for the economy. In June 2023, there was an initial decline in inflation rates, signaling a gradual easing of rapid price increases for goods and services. At the same time, consumer prices rose due to higher costs of food products—dairy, meat, eggs, as well as certain vegetables and fruits—driven by increased production costs, reduced livestock numbers, and adverse weather conditions affecting agriculture. Official statistics indicate that core inflation fell to 12.3%, supported by the Central Bank's measures such as raising the policy rate and managing energy supplies, which help stabilize prices. However, in May, administrative inflation increased to 19.8%, mainly because of tax adjustments on tobacco and alcohol, alongside higher expenses for utility providers. Economists suggest that the reduction in administrative price increases contributed to the deceleration observed in June. Last year's spike in tariffs led to a temporary base effect impacting current inflation figures. The government remains confident in its ability to gradually bring inflation back toward its target through continued monetary policy, currency interventions, and banking sector regulations. If energy supply stability and the absence of new shocks persist, annual inflation is expected to decrease in the second half of 2025. While inflation expectations among businesses and the public have somewhat worsened, they still remain significantly below actual price growth, providing a foundation for economic stability in the future.