The NBU named the reasons for the acceleration of inflation and predicted further price growth
Date: 2024-09-12 Author: Alexei Fomin Categories: ECONOMY
As noted in the review, the actual rate of price growth was slightly higher than the trajectory of the NBU forecast for July. At the same time, fundamental inflationary pressure increased more than predicted. Thus, the core inflation indicator in August rose to 6.5% from 5.7% in July.
According to the NBU, the acceleration of consumer price growth was primarily due to the effects of worse harvests this year and the impact of higher business costs on food raw materials, energy and wages. Price pressure was also supported by the pass-through effects from the weakening of the hryvnia exchange rate in previous months.
As noted by the NBU, the growth of prices for raw food products resumed – up to 3.7% r/s. In addition, the growth of administratively regulated prices slightly accelerated – up to 13.7% y/y.
The growth of fuel prices rapidly slowed down – to 10.1% y/y. Such dynamics reflected the adequacy of fuel reserves and lower than expected oil prices on world markets.
The growth of prices for processed food products accelerated to 7.4% y/y. Prices for non-food products accelerated their growth (by 1.9% y/y), primarily under the influence of the exchange rate factor. At the same time, prices for clothing and footwear fell faster.
Services also grew in price somewhat faster - by 10.5% y/y under pressure from business expenses on wages and energy
"Consumer inflation continued to grow in August, but remained moderate and was quite close to the NBU forecast. Inflationary pressure will persist in the coming months due to an increase in business expenses on wages and electricity, a gradual increase in excise taxes and the effects of the hryvnia devaluation carryover in previous months," the NBU predicts.
Recall that consumer prices in Ukraine in August 2024 increased by 0.6%. Annual inflation accelerated to 7.5%. The only year-on-year inflation was higher in August last year (8.6%).
In July, the NBU worsened its inflation forecast for 2024 to 8.5% from 8.2%. At the same time, the Ministry of Economy improved its inflation forecast for December 2024 to 7.9% from 9.7%.
According to the NBU, the acceleration of consumer price growth was primarily due to the effects of worse harvests this year and the impact of higher business costs on food raw materials, energy and wages. Price pressure was also supported by the pass-through effects from the weakening of the hryvnia exchange rate in previous months.
Prices of goods and services
The growth of fuel prices rapidly slowed down – to 10.1% y/y. Such dynamics reflected the adequacy of fuel reserves and lower than expected oil prices on world markets.
The growth of prices for processed food products accelerated to 7.4% y/y. Prices for non-food products accelerated their growth (by 1.9% y/y), primarily under the influence of the exchange rate factor. At the same time, prices for clothing and footwear fell faster.
Services also grew in price somewhat faster - by 10.5% y/y under pressure from business expenses on wages and energy
"Consumer inflation continued to grow in August, but remained moderate and was quite close to the NBU forecast. Inflationary pressure will persist in the coming months due to an increase in business expenses on wages and electricity, a gradual increase in excise taxes and the effects of the hryvnia devaluation carryover in previous months," the NBU predicts.
Inflation in Ukraine
In July, the NBU worsened its inflation forecast for 2024 to 8.5% from 8.2%. At the same time, the Ministry of Economy improved its inflation forecast for December 2024 to 7.9% from 9.7%.
