The National Bank of Ukraine (NBU) has improved its inflation forecast for 2023 to 18.7% (the October forecast was 20.8%), as the market expected, the regulator’s press service said Thursday.
“The NBU forecasts a slowdown in inflation to 18.7% in 2023. This will be facilitated by continued tight monetary conditions, lower global inflation and weaker consumer demand amid power outages,” the statement explained.
It is pointed out that the receipt of announced volumes of international aid and joint actions of the NBU and the government on boosting the market of domestic debt attracting will allow to avoid emission financing of the budget deficit and to balance the currency market.
The regulator expects that inflation will slow down more quickly in the years to come due to lower security risks, a full recovery in logistics and an increase in yields.
The NBU, in particular, predicts that it will fall to 10.4 percent in 2024 and 6.7 percent in 2025.
“The main contribution to inflation in these years will have an administrative component due to the need to bring tariffs for housing and communal services to market levels,” the central bank explained.
It is noted that over the past three months the annual inflation rate has remained almost unchanged.
Stabilization of inflationary pressure was facilitated by the de-occupation of territories, the expansion of food supply, measures taken by the NBU and weaker consumer demand amid Russia’s energy terror.
At the same time, price pressures remain significant due to the aftermath of the war, including the destruction of enterprises and infrastructure and disruption of production and supply chains. Inflation expectations remained elevated despite stabilization.
