Accelerating inflation in Ukraine: central bank names main drivers
Ukraine's consumer inflation rate rose to 11.2% in November 2024, exceeding the National Bank of Ukraine's October forecast. The increase was driven by food inflation and rising administratively regulated prices and this trend likely continued into December, according to the regulator's Macroeconomic and Monetary Review (January 2025).
The fundamental inflationary pressure intensified due to the rising costs of processed food products, increased business expenses for energy, and labor costs, as well as the impact of devaluation on prices. In November, core inflation reached 9.3% year-over-year.
The increase in food prices was caused by a decrease in the supply of certain agricultural and livestock products, leading to higher prices for both raw and processed goods. The rise in non-food item prices accelerated due to currency fluctuations, particularly the slowdown in the decline of clothing and footwear prices.
Price increases also affected communication services, education, culture, recreation, as well as the restaurant and hotel business. This was a result of increased production costs. The year-over-year increase in fuel prices slowed down due to a decrease in global oil prices and restrained domestic demand.
Administratively regulated inflation also accelerated. Alcoholic beverages and tobacco products became more expensive due to the devaluation effect and the expected increase in excise duties from January 2025. However, a moratorium on increasing tariffs for certain housing and utility services restrained more significant price hikes in this category.
Producer price growth in November slowed to 24.1% year-over-year, particularly in the electricity and gas supply sector. However, the mining industry saw a resumption of price increases due to increased global demand and domestic factors such as labor shortages and rising energy and logistics costs.
On December 12, the National Bank of Ukraine's board decided to raise the key policy rate by 0.5 percentage points to 13.5% annually.
