Finance Minister Serhiy Marchenko sees the potential to keep inflation within 10%.
“There are hopes that it will be possible to keep inflation within 10%, not exceeding 10%,” he said during the Ukrainian Financial Forum, organized by ICU.
According to the State Statistics Service, inflation in July 2021 in Ukraine increased to 10.2% in annual terms, while in June this figure was at the level of 9.5%. At the same time, the NBU expects that by the end of the third quarter, inflation will peak this year at 11.2%.
Commenting on deteriorating expectations of a number of investment banks regarding the growth of the Ukrainian economy, the minister noted that these forecasts are based on GDP growth in the second quarter compared to the same period last year.
“It is still difficult to estimate the end of the year, because main capital investments and expenditures are planned for the third or fourth quarter,” Marchenko said.
According to him, the situation will improve, as evidenced by the constant growth of retail turnover, as well as the growth potential of the construction industry.
“By the end of the year, we expect a stable situation both in public finances and in the economy, without sharp shocks. I think that we will have 4% of GDP growth this year,” Marchenko said.
FINANCE MINISTER, INFLATION, SERHIY MARCHENKO, UKRAINE'S INFLATION
The National Bank of Ukraine (NBU) expects inflation to rise to 11% in 2021, according to a chart released by the central bank.
According to the forecast of the rate curve, the regulator expects inflation to slow down with a return to the 5% target in the second half of 2022.
It is indicated that with a probability of 30%, the inflation rate by the second half of 2022 will be in the range of 4-7.5%.
The National Bank of Ukraine (NBU) has revised its 2021 inflation forecast from 8% (in its April forecast) to 9.6%, and expects that inflation will return to 5% in H2 2022.
“With global prices surging and demand recovering further, the NBU has revised its 2021 inflation forecast from 8% to 9.6%. After peaking in the fall of this year, inflation will begin to slow as the new harvest arrives and global energy prices adjust… inflation in H2 2022 will decline to its 5% target and remain there going forward,” the NBU said on its website on Thursday.
Inflation will soon rise to slightly above 10%, but it will weaken at the end of 2021 and return to its 5% ± 1 pp target range in H2 2022.
The rise in inflationary pressure, including its fundamental component, is also driven by the dynamic recovery of the economy, as evidenced by monthly and other high-frequency indicators. By tightening its monetary policy, in particular through raising its key policy rate and rolling back its emergency monetary measures, the NBU will also keep inflation expectations under control and gradually reduce underlying inflationary pressures.
The growth of consumer prices in Ukraine at the end of June 2021 decreased to 0.2% from 1.3% at the end of May. In annual terms, inflation remained at 9.5%.
The State Statistics Service said on Friday, that core inflation in June was 0.4%, while in May it was at 0.7%.
In general, for the first six months of 2021, inflation in Ukraine amounted to 6.4%, core inflation to 4.3%.
The National Bank of Ukraine (NBU) has revised its inflation forecast from 7% to 8% in 2021, expecting inflation to return to the 5% target in H1 2022.
“Considering the fast-paced recovery of the global economy and higherinflationary pressures, the NBU revised its inflation forecast from 7% to 8% in 2021, expecting inflation to return to the 5% target in H1 2022 and settle at this level further on,” the NBU said on its website on Thursday.
The central bank said that inflation will peak in Q3 2021. Inflation will start to decelerate in autumn, return to the 5% ± 1 pp target range in H1 2022, and subsequently remain there.
The steep rise in inflation was largely driven by temporary factors, such as growing global prices for food and energy. A revival in the global economy and the effects of smaller harvests continued to push up prices. A low comparison base also played an important role.
Underlyinginflationary pressures increased due to sustained growth in consumer demand, which was, among other things, fueled by higher wages, the NBU said.
Retail turnovers consistently exceeded pre-crisis levels, being 5.6% year-over-year larger in February, the central bank said.
The growth of consumer prices in Ukraine in March 2021 accelerated year-over-year to 8.5% from 7.5% in February, from 6.1% in January and from 5% in December 2020.
According to the State Statistics Service on Friday, in March inflation increased to 1.7%, while in February it was 1%, in January 1.3%.
In addition, the State Statistics Service in March 2021 recorded underlying inflation of 1.6% compared to the previous month and 2.4% from the beginning of the year.
The Ukrainian government expects inflation of 7.3% in 2021, while the National Bank of Ukraine (NBU) 7%. At the same time, the NBU said that inflation in the first quarter was higher than its expectations. According to the NBU, a turning point ininflationary dynamics may occur in August or September 2021.
