National Bank forecasts gradual increase in tariffs for Ukrainian consumers in 2024, emphasizing the need to restore prices to economically justified levels
Ukraine's National Bank, in its annual 'Inflation Report,' has highlighted significant upcoming shifts in energy prices and utility tariffs.
According to the report, consumers should expect a phased increase in electricity, gas, heating, and hot water rates starting in 2024, which will impact household budgets across the country.
The central bank clarifies that until the end of 2023, tariffs will remain stable due to a moratorium on hikes, allowing households to stabilize their expenses.
However, from early 2024, authorities plan to initiate steps to bring tariffs in line with their true economic value, addressing the financial losses accumulated in the energy sector and supporting infrastructure modernization.
The report further details that by 2026, Ukraine aims to complete the process of aligning tariffs with market-based levels, ensuring sustainable growth.
The existing tariffs provide a short-term buffer against inflation spikes, but their progressive increase is crucial for the energy system’s recovery after the extensive damage caused by the ongoing conflict.
The report notes that the energy tariffs remain unpredictable in terms of timing and scale, creating risks for inflation forecasting.
Sharp or rapid rises could trigger further inflationary waves, inflating prices for goods and services in general.
To offset these costs, the government will likely need to enhance subsidy programs for vulnerable households and industries.
However, prolonged suppression of tariffs risks concealing underlying financial problems within the energy sector, potentially hampering long-term sustainability and infrastructure development.
The report also references macroeconomic scenarios for 2026, considering both prolonged conflict and sustained peace, emphasizing that critical issues such as workforce shortages, energy security, and access to long-term financing will shape Ukraine’s economic landscape regardless of the conflict's duration.