The NBU expects a slight increase in inflation this year, but due to better real inflation figures and improved forecasts, inflation at the end of the year is projected at 8.2% instead of the expected 8.6%. UNN writes about this with reference to NBU data.
As before, the NBU forecasts a moderate increase in inflationary pressures this year, given the expected exhaustion of the effects of the previous year's large harvests, further recovery in consumption, and higher business spending in the wartime environment. At the same time, given the better actual inflation dynamics and improved inflation expectations, the inflation forecast for the end of this year has been lowered from 8.6% to 8.2%
The NBU expects inflation to return to the target range of 5% ± 1 percentage point over the next few years and remain within this range. This will be due to stabilization of economic conditions, reduced external inflationary pressures, and consistent monetary policy. Inflation is projected to slow to 6% at the end of 2025 and reach 5% in 2026.
Consumer inflation declined to 3.2% yoy in March, which was below the NBU's forecast in the January 2024 Inflation Report. This deviation was caused mainly by unforeseen and temporary factors.
Core inflation also slowed to 4.2% yoy, in line with the NBU's forecasts. On the one hand, rising wages and the effects of the blockade of the western borders supported underlying price pressures. On the other hand, improved inflation expectations and lower prices for raw food products, which affected prices for processed food and some services, helped to ease this pressure.
Recall
The National Bank of Ukraine is preparing a series of steps for currency liberalization in the coming weeks, keeping international reserves at the current level, as part of its strategy to ease currency restrictions and return to inflation targeting.