Higher inflation in October “expected, albeit controlled” - NBU

Core inflation in annual terms is expected to accelerate to 21.5% in October, while remaining under the regulator’s control as its current dynamics correspond to the trajectory laid down by the National Bank in its outlook.

That’s according to an NBU report commenting on the State Statistics data on inflation, Ukrinform reports.

"The actual rates of price growth corresponded to the trajectory of the National Bank's basic forecast published in the Inflation Report for October 2022. Core inflation in annual terms is expected to accelerate to 21.5% against 20.4% seen in September," the report said.

The NBU emphasizes that the main reason for the higher pace of inflation remains the direct consequences of Russia's full-scale war against Ukraine. Among them: disruption of production and supply chains, growth of business production costs, situational increase in demand for certain goods and services, as well as a decrease in the goods supplies. Indirect consequences of the war, such as exchange rate effects and worsening expectations of the population and businesses, have also affected prices.

The regulator recalled that, according to its forecast, inflation is expected to rise to about 30% at the end of the year before slowing down in 2023.

In order to maintain control over inflationary processes, the National Bank keeps the key rate at the level of 25%, predicting that it will long remain at the current level. This is necessary to ensure the attractiveness of hryvnia assets, reduce pressure on the forex market, balance expectations and, ultimately, reduce inflation in the coming years.

As reported with reference to the State Statistics Service, inflation in the consumer market in October 2022 against September 2022 stood at 2.5%, while from year-start it amounted to 24.8%. Compared to October 2021, it stood at 26.6%. Eggs rose in price the most (by 60.5%). In addition, the prices of lard, vegetables, fruits, meat and meat products, soft drinks, fish and fish products, cheeses, butter, and milk have increased, too.