Inflation continues to accelerate, with slowdown expected Q2 2023, says NBU
The slowdown is predicted on the basis of a reduction of security risks, thanks to the successful actions of the Armed Forces (Photo:Elizaveta Sergienko/Press Center of the NBU)
Inflation in Ukraine has accelerated to 26.6% annually, though a slowdown in the inflation cycle is expected in the second quarter of next year, the National Bank of Ukraine (NBU) reported on Dec. 8.
The slowdown is predicted on the basis of a reduction of security risks, thanks to the successful actions of the Armed Forces.
However, a rapid slowdown in inflation is not expected, since the Ukrainian economy is being forced to function in conditions of limited logistics and pro-longed electricity shortages.
The main factors of the acceleration of inflation remain military operations and the occupation of certain regions of Ukraine, the NBU noted, which is leading to an increase in business production costs and a shortage of individual products.
The gradual strengthening of monetary conditions after the June increase in the discount rate to 25% and the fixation of the official hryvnia exchange rate play an important part in stabilizing inflationary expectations, the central bank said.
Weakening consumer demand may partially offset the inflationary effects of rising business production costs. Consequently, inflation will decrease rather slowly. In 2023−2024, it will significantly exceed the NBU’s goal of 5%.
The NBU kept its key policy rate at 25%.
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