National Bank of Ukraine explained exceeding the May inflation forecast due to faster growth of raw food prices due to unfavorable weather conditions in the spring and active food exports.
In May, inflation accelerated to 15.9% in annual terms. Prices rose faster than the NBU forecast, published in the April Inflation Report. While core inflationary pressures turned out to be somewhat weaker than expected, they remained resilient amid strong consumer demand and significant business spending on raw materials and labor.
In the spring, inflation grew as predicted, however, according to the NBU, it reached its peak value this year in May. In the future, it is expected to gradually slow down in various segments of goods and services. Among the factors of the slowdown are an increase in the supply of food due to the arrival of new crops, a better situation in the energy sector compared to last year, a decrease in world oil prices, a weakening of external price pressure and the further influence of the NBU’s monetary policy.
An additional statistical effect will be caused by last year’s high base for comparison of administratively regulated prices, in particular due to a one-time increase in electricity tariffs in June 2024.
In May, the prices of food products and non-alcoholic beverages on the consumer market increased by 2.8%. Fruits rose in price the most — by 17.6%. Prices for pork, poultry, beef, soft drinks, fish and fish products, bread, lard, vegetables, pasta and sugar also increased by 8.3-0.7%.
It will be recalled that on June 10, the State Statistics Service reported that annual inflation in May increased to 15.9% after 15.1% in April. The monthly inflation rate in May was 1.3% against 0.7% in April.
The NBU predicts that in the summer of 2025, inflation will decrease, and by the end of the year it will be 8.7%, returning to a single-digit level. This will be facilitated by new crops, improved energy supply, moderate pressure on the labor market and lower global oil prices.
