Inflation in Ukraine accelerated to 24.6% – the NBU

What happened? In September, annual consumer inflation accelerated to 24.6%. In monthly terms, prices increased by 1.9%.

Source. The data published by the State Statistics Service of Ukraine.

Details. The main reason for the acceleration of inflation remains the consequences of a full-scale war – the destruction of factories, disruption of supply and logistics chains, decrease in the supply of goods and services, and an increase in business production costs. Additional pressure on prices led to a worsening of public and business expectations, as well as an adjustment of the official hryvnia exchange rate in July.

The price growth rates accelerated as expected, but remained lower than the NBU's baseline forecast published in the Inflation Report for July 2022, thanks to faster saturation of the market with petroleum products and stabilisation of fuel prices.

Annual core inflation accelerated to 20.4% from 19.1% as it was in August.

The price growth rates of non-food goods increased to 18.8% yoy under the influence of the July adjustment of the official exchange rate of the hryvnia, limited supply of new batches of goods, depletion of old stocks and high costs of logistics.

Household goods (dishes, furniture, home textiles, household appliances, household chemicals), electronics, cars, medicines, personal care goods, and products for the repair rose in price at a faster pace.

The price increase of processed food products sped as well (up to 25.5% yoy). Such dynamics are associated with the growth of business production costs, in particular for raw materials, energy and logistics, high prices on world markets, as well as with the July adjustment of the official exchange rate.

The price of dried fruits, fish products and soft drinks, which are mainly imported, as well as sunflower oil, its processing products (spreads and mayonnaise) and dairy products, the cost of which significantly depends on prices on foreign markets, grew at a higher rate. On the other hand, the price of bread increased more slowly, in particular due to the sufficient harvest of early cereals.

The increase in the cost of services remained at the level of the previous month (15.6% yoy). The prices for medical services, the Internet, services of beauty salons, dry cleaning, and public catering establishments, however, increased faster.

The return of citizens to their cities of residence and demand from internally displaced persons increased the pressure on the cost of housing rent. Together with the shortage of some consumables and labor force, this led to the acceleration of the growth of the cost of services related to housing repair. At the same time, tariffs for financial services and the cost of higher education grew more slowly.

The rate of growth of raw food prices has hardly changed (40.9% yoy). Prices for meat, in particular pork, grew at a higher rate due to a shortage of live pigs, as well as for eggs – due to a decrease in the number of chickens and an increase in production costs. Under the influence of the increase in energy sources prices, sugar prices rose faster.

Instead, the growth of prices for vegetables of borsch set (cabbage, beets, carrots, and potatoes) slowed down due to the expansion of the supply from the central and northern oblasts. The price of flour, buckwheat, and other cereals increased more slowly due to positive expectations regarding the future harvest.

The growth of administratively regulated prices remained at the level of the previous month (14.7% yoy).

The growth rate of fuel prices decreased (to 66.2% yoy). The NBU explained this as a further decrease in world oil prices and the saturation of the domestic market.