What has become more expensive in the last month and how will prices change during the summer

In May, the growth rate of inflation accelerated somewhat. However, compared to May 2023, it was 3.3%. This is a rather low indicator. In addition, the increase in prices is caused by objective factors. Last month, the prices of medicine and transport increased slightly, but clothes and shoes, household appliances and some food products fell in price. This balanced the situation on the market.

In May, consumer prices rose on average by less than 1% (+0.6%). June will be characterized by further acceleration of inflation. First of all, the market will be affected by the increase in electricity prices. The prices of cigarettes and alcohol will also increase. However, some goods will continue to fall in price due to a decrease in demand or an increase in supply. The main role here will be played by the seasonality factor.

What got cheaper in May?

Although food products rose in price by an average of 0.9% over the month, the price of some groups of goods decreased significantly. In addition, the cost of food decreased by 0.8% year-on-year.

According to the report of the State Statistics Service, the price of eggs fell the most. In just one month, the cost of the product decreased by 14.3%. Compared to the indicators of May 2023, chicken eggs generally lost more than a third in price (-35.6%).

The fact is that due to the occupation of parts of Kherson region, Mykolaiv region, Zaporizhzhia region and other regions, large poultry farms have reduced production or stopped operating altogether. That is why the price of eggs increased in 2022-2023. Later, business began to recover, and recent export disruptions led to an oversupply of the product domestically. Even on the eve of Easter, when eggs traditionally increase in price due to increased demand, prices continued to decrease.

Also, in May, milk became cheaper by 1.5%, although, if compared with the prices not for April 2024, but for May 2023, then milk is still 7.9% more expensive.

Soft drinks fell in price by 0.1%. This is due to the fact that the price of sugar decreased by 14.2% over the year.

The price of oil in May remained the same as in the previous month. Although the product has become cheaper in annual terms. The price of sunflower oil is currently 9% lower than in May 2023.

Although vegetables rose in price by 1.3% on average in May, compared to April, the price decreased year-on-year. Currently, vegetables are 17.4% cheaper than in May last year.

Clothes and shoes became cheaper in May. From April to May, the price of this group of goods decreased by an average of 1.5%. Over the year, the cost of shoes and clothing decreased by 6.1%.

Household appliances and household items fell in price by 0.3% for the month, and by 1.3% for the year.

In addition, the prices of railway tickets decreased by 3.5%, compared to the indicators of May 2023. Leisure and cultural services fell in price by 2.3%.

What products have prices increased?

The increase in prices was noticeable in the following groups of food products: bread, meat, cheese, fruits. Prices for alcohol and tobacco products also increased.

In particular, the price of meat and meat products increased by 0.4% for the month. Over the year, the cost of such products increased by an average of 2.9%. Fish and fish products rose in price by 5.4%, compared to May last year.

The price of bread increased by 6.5% over the year, and cheese became more expensive by 7.4%. Alcohol and tobacco prices increased by 0.7% for the month. If compared with the indicators of May 2023, the cost of such products increased by 7.4%.

Utility services practically did not increase in price from April to May. But, compared to May last year, the average bill increased by 13%. Housing maintenance, management of multi-apartment buildings and electricity have become more expensive.

The price of medicines increased by 1.1% for the month, and the price of medicines increased by 9.4% for the year.

Ukrainian motorists have clearly felt the consequences of inflation. Prices for fuel and lubricants rose by 22.5% for the year. In this connection, bus ticket prices increased by an average of 8.3% over the year.

Communication services rose in price by 0.5% over the year, and prices in the hotel and restaurant business rose by 10.9%. In addition, educational services became more expensive by 11.9%.

What will happen to inflation next?

In 2023 and during the first quarter of this year, the inflationary burden decreased. In May, inflation began to rise. In the future, we will observe the acceleration of this process. The reasons for the inflation jump are the reduction of the National Bank’s discount rate, the liberalization of the currency policy and the government’s attempts to close the budget deficit by increasing tax revenues.

In addition, the rise in energy prices will provoke an increase in the costs of producers. The difference in price, of course, will be paid by the final buyer.

Already in June, the price of electricity will increase by more than 60%. An increase in excise taxes on tobacco products and alcohol will contribute to the increase in prices for these types of products. The beginning of the picnic season will increase the prices of meat and meat products.

The adoption by the parliament of changes to the legislation, which provide for bringing the value of excise taxes on fuel to European standards, will lead to an increase in the price of fuel already in July. This will entail an increase in prices for transport and logistics services, which, in turn, will affect the cost of most goods.

On the other hand, due to the seasonal factor, vegetables and fruits will become cheaper.

The situation on the market will depend on the carrying capacity of Ukrainian borders, the volume of agricultural exports and the responsible behavior of business in the matter of currency liberalization. However, the inflation rate will increase by the end of the year in any case. The National Bank predicts that in December its indicators will reach the mark of 8.2%.

Note that this phenomenon is quite natural – the market will adapt to changes in excise duties and energy tariffs.  In 2025, the period of turbulence should end and the level of inflation will gradually decrease. The National Bank predicts that already in 2026 this indicator will be 3-5%.