National Bank of Ukraine improves inflation forecast to 18.7% for 2023

26 January, 07:00 PM
The regulator expects inflation to decelerate more rapidly in the coming years (Photo:Прес-центр НБУ)

The regulator expects inflation to decelerate more rapidly in the coming years (Photo:Прес-центр НБУ)

The National Bank of Ukraine (NBU) has improved its inflation forecast for 2023 to 18.7%, down from from 20.8%, the press office of the central bank said on Jan. 26in a report on the financial situation in Ukraine.

Tight monetary conditions, global inflation declines and weaker consumer demand amid regular power outages will contribute to the strengthening of the national currency, the central bank said.

Expecting inflows of announced financial assistance for Ukraine in combination with the NBU and Ukraine's government efforts to activate the domestic debt market will help the country cope with the budget deficit and any disbalancing of the foreign currency market, it says in the report.

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Inflation is expected to slow down even further in the coming years thanks to subsiding security risks, proper recovery of logistics, and larger harvests. In particular, the NBU predicts the inflation rate will drop to about 10.4% in 2024, and to 6.7% in 2025.

Utility tariffs, which have to be brought to market levels, will be one of the major contributing factors to inflation.

It is emphasized that in the past three months inflation has stabilized thanks to the liberation of Ukrainian areas, the increase in the food supply, NBU measures and = lower demand due to Russian energy terror.

Meanwhile, price pressure remained strong. It has been caused by the consequences of the war, in particular by destroying business premises and infrastructure, breaking of logistics chains, and so on. Still, inflation expectations are high despite the obvious stabilisation of the situation.

Earlier, it was reported that the NBU was leaving the key policy rate unchanged at 25% per annum.

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