Industrial inflation in Ukraine tops 30%, set to rise further: reasons
Growth in producer prices for industrial goods slowed to 0.6% from December 2024 to January 2025, the lowest since March last year, but annual industrial inflation in Ukraine soared past 30%, according to the State Statistics Service.
"Against last year’s low base — when producer prices dropped sharply in the first quarter — annual industrial inflation kept accelerating, reaching 32.5% in January compared to January 2024," said Danil Getmantsev, head of the parliamentary committee on finance, tax, and customs policy.
The biggest price jumps came in these industries:
- electricity, gas, and steam supply (+53%);
- pharmaceutical production (+35.9%);
- food production (+20.6%).
Getmantsev predicts annual industrial inflation will climb to 40% over the next two months, putting pressure on consumer prices directly through raw material costs — affecting food, medicine, and more — and indirectly via labor and energy expenses baked into production costs.
He argued that the three-year war has become a constant inflation driver. On a macro level, this shows up through a massive double deficit: the budget (about 24% of GDP, excluding grants) and foreign trade (current account, about 7% of GDP), both propped up by international aid. On a micro level, businesses face rising costs for energy, wages, and logistics.
Still, Getmantsev emphasized that financially, things are better than at the start of the full-scale invasion.
"The situation is under control now: budget funding needs for 2025 and part of next year are fully met, and international reserves are solid enough to keep the exchange rate stable," he said.
Consumer inflation also sped up in early 2025, hitting 12.9% annually, above the National Bank of Ukraine’s forecast.
The central bank said this outpaced expectations due to three main reasons: sharper-than-anticipated rises in regulated prices for goods and services; faster increases in market service costs; and tax and regulatory changes.
