The World Bank has downgraded its inflation forecast for Ukraine to 20% by the end of 2022 from its April forecast of 15% inflation, Arup Banerji, World Bank Regional Country Director for Eastern Europe (Belarus, Moldova and Ukraine), has told Interfax-Ukraine.
“Inflationary pressures are rising. Consequently, at this stage, inflation is expected to continue rising and could reach 20% in December against 15% in our April forecasts,” Banerji said in an exclusive interview with Interfax-Ukraine.
Banerji said that the rise in inflationary pressure is particularly because of the need to cover budgetary requirements in March-May.
“International partners have acknowledged the financial challenges, thus they have committed around $20 billion in financial assistance to Ukraine. Despite these significant commitments, the timing of repayments will continue to be critical in order to meet Ukraine’s current needs,” the World Bank regional director said.
The World Bank has also maintained its forecast for a sharp contraction of 44% in Ukraine’s GDP in 2022.
“However, owing to the length of the war, when hostilities continue in several regions of Ukraine, we cannot be sure of our preliminary forecasts for a recovery in the medium term relatively,” Banerji said.
Consumer price growth in Ukraine in April 2022 slowed to 3.1% from 4.5% in March, but exceeded 1.6% in February and 1.3% in January, the State Statistics Service (Gosstat) reported on Tuesday.
In April last year, inflation was 0.7%, so in annual terms in April this year it rose to 16.4% from 13.7% in March, 10.7% in February and 10% in January, the agency said.
Core inflation also eased to 3% last month from 3.8% in March. However, taking into account 0.7% in April 2021 in annual terms, it increased to 13% from 10.5% in March, 8.2% in February and 7.6% in January.
Since the beginning of this year, for its first four months, inflation in Ukraine amounted to 10.9%, and the base – 8.1%, said the State Statistics Service.
The National Bank of Ukraine, as reported by its head Kirill Shevchenko, expected an increase in inflation in April to 15.9%.
As reported, in 2021 inflation in Ukraine rose to 10% from 5% in 2020 and 4.1% in 2019, while core inflation rose to 7.9% against 4.5% a year earlier.
Inflation in Ukraine in annual terms in April may increase to 15.9% from 13.7% in March, this forecast was given by the head of the National Bank of Ukraine Kirill Shevchenko, referring to the NBU estimates based on web-scraping (method collecting prices from online supermarkets).
“In a war, it is impossible to avoid price increases … at the end of the year it (inflation) may exceed 20%. This is a significant level of price growth, but controlled. And such indicators are not comparable with 2015, when inflation reached 60% in some months,” wrote he is in the column for NV.Business.
Shevchenko stressed that the NBU has significant experience in fighting inflation.
“In general, in world history there were no cases when a country entered into a state of martial law, having such a highly developed financial system and monetary policy,” he added.
The head of the National Bank noted that while market mechanisms will have a limited impact on the market, the regulator will keep price growth by fixing the exchange rate and maintaining part of the restrictions.
“But as soon as monetary transmission channels start working and uncertainty decreases, we will return to the inflation targeting regime, which at one time helped to overcome the same 60% inflation,” Shevchenko said.
According to him, the National Bank will gradually restore the forecast cycle and again begin to apply the discount rate to reduce inflation to the target of 5% and keep inflation expectations under control.
As the State Statistics Service reported, consumer price growth in Ukraine in March 2022 accelerated to 4.5% from 1.6% in February, 1.3% in January and 0.6% in December. In March last year, inflation was 1.7%, so in annual terms, in March this year, it rose to 13.7% from 10.7% in February and 10% in January.
The growth of consumer prices in Ukraine in January 2022 accelerated to 1.3% from 0.6% in December and 0.8% in November 2021, the State Statistics Service reported.
At the same time, in January last year, it also amounted to 1.3%, so in annual terms, inflation remained at 10%, the agency said.
Underlying inflation fell to 0.1% last month from 0.4% in December and 0.8% in November. Taking into account 0.3% in January 2021, in annual terms underlying inflation decreased to 7.6% from 7.9% in the last year.
According to the State Statistics Service, in the consumer market in January 2022 compared to December 2021, prices for food and non-alcoholic beverages increased by 2.5%. Vegetables went up in price by 20.5%, prices for eggs, fruits, bread, milk and dairy products, meat and meat products, rice, lard, butter increased by 3.9-1%. Sugar and sunflower oil fell in price by 0.8% and 0.5%, respectively.
Prices for clothes and footwear fell by 5.7%, including footwear – by 6.1%, clothing – by 5.4%.
The increase in tariffs for housing, water, electricity, gas and other fuels by 0.7% was mainly due to an increase in sewerage tariffs by 14.9%, water supply – by 12%.
Last month, transport prices increased by 1.3%, primarily due to a 2.9% increase in the cost of travel in railway passenger transport, and a 2.6% increase in fuel and lubricating oils.
In the telecommunications sector, prices increased by 1.1%, which is associated with an increase in tariffs for local telephone communications by 13.6%.
The increase in the cost of education services by 1.6% was mainly due to the increase in fees for the maintenance of children in preschool institutions by 23.3%.
As reported, in 2021 inflation in Ukraine rose to 10% from 5% in 2020 and 4.1% in 2019, while underlying inflation rose to 7.9% against 4.5% a year earlier.
The growth of consumer prices in Ukraine in annual terms in August 2021 remained at the level of 10.2%, the State Statistics Service reported.
According to its data, after inflation of 0.1% in July, deflation of 0.2% was recorded in August this year, which corresponds to the dynamics of prices in August last year.
Underlying inflation in August was zero after deflation of 0.1% a month earlier. In August last year, an underlying inflation of 0.1% was recorded, respectively, in annual terms, it decreased to 7.2%.
In the consumer market in August, prices for food and non-alcoholic beverages decreased by 0.7%. Vegetables and fruits fell in price the most – by 18.3% and 5%, respectively. Prices for sunflower oil, pasta, rice and cheese fell by 1.0-0.2%. At the same time, prices for eggs increased by 18%, prices for sugar, meat and meat products, milk, sour cream, bread, butter, fermented milk products, fish and fish products rose by 3.6-0.3%.
Prices for alcoholic beverages and tobacco products increased by 0.4%, which is associated with a rise in prices for tobacco products by 1.0%.
Prices for clothes and footwear fell by 3%, in particular for footwear – by 3.7%, clothing – by 2.5%.
The rise in tariffs for housing, water, electricity, gas and other fuels by 0.6% was mainly due to an increase in prices for maintenance and repair of housing by 2.3%, natural gas – by 2.1%, sewage – by 0.9%, water supply – by 0.7%.
Transport prices increased by 0.8%, primarily due to the rise in the cost of transport services by 1.9%, fuel and oils – by 1.6%.
As reported, in June consumer prices in Ukraine increased by 0.2%, in May – by 1.3%.
In general, for the first eight months of this year, inflation in Ukraine amounted to 6.2%, underlying inflation – 4.2%.
The National Bank of Ukraine in July downgraded the inflation forecast for 2021 from 8% (in the April forecast) to 9.6%. According to it, by the end of the third quarter, inflation will peak this year at 11.2%, after which it will begin to decline.
The year-over-year growth of consumer prices in Ukraine in September 2021 accelerated to 11% from 10.2% in August, the State Statistics Service reported on Friday.
According to the service, after deflation of 0.2% in August, inflation was recorded at 1.2% in September this year, while in September last year, inflation was 0.5%.
In addition, the State Statistics Service last month recorded underlying inflation at 1.3% after zero underlying inflation in August 2021. In September last year, underlying inflation was 1.1%.
In the consumer market in September, prices for food and non-alcoholic beverages grew by 1.1%. Most of all (by 13.6%) eggs have risen in price. Prices for lard, vegetables, milk and dairy products, meat and meat products, butter and bread rose by 3.7-1.1%. At the same time, fruits, sunflower oil and sugar fell in price by 3.4-0.1%.
Prices for alcoholic beverages and tobacco products grew by 0.8%, which is associated with a rise in prices for tobacco products by 1.1%.
Clothes and footwear went up in price by 7.9%, including footwear – by 8.2%, clothes – by 7.6%.
The rise in prices (tariffs) for housing, water, electricity, gas and other fuels by 0.5% was mainly due to an increase in prices for natural gas by 1.8%, maintenance and repair of housing – by 1.4%, and housing rent – by 0.9%.
Transport prices decreased 0.1% due to a decrease in the cost of travel in railway passenger transport by 1.7%, fuel and oils – by 0.2%.
Education services have risen in price by 13.2%, namely: high education – by 17.3%, medium education – by 11.5%.
As reported, in August and July consumer prices rose by 10.2%, in June – by 0.2%, in May – by 1.3%.
In January-August 2021, inflation in Ukraine amounted to 7.5%, and underlying inflation was 5.5%.
The National Bank of Ukraine forecasted inflation in September-October at the level of 10-11% with a further decline below 10%.
