Inflation slows faster than projected by NBU for third month in a row
Inflation has been decreasing faster than projected by the National Bank of Ukraine (NBU) for the third consecutive month, thanks to an ample food and fuel supply, better conditions in the energy sector, improved inflation expectations, and a favorable situation in the foreign exchange market's cash segment.
The NBU press service said this in a report seen by Ukrinform.
"For the third month in a row, inflation has been slowing faster than the NBU's forecast due to the predominance of food supply over demand, a better situation in the energy sector, as well as the NBU's consistent monetary policy aimed at maintaining exchange rate stability and increasing the attractiveness of hryvnia savings. Improved inflation and exchange rate expectations further contribute to the easing of underlying inflationary pressures," the statement said.
Nonetheless, inflationary dynamics remain at risk, particularly due to the war's high level of uncertainty.
Consumer inflation in March slowed to 21.3% YoY from 24.9% YoY in February, with prices rising 1.5% MoM.
The increase in prices for processed food products slowed significantly, while prices for dairy products and sunflower oil rose more slowly due to ample domestic supply and lower export prices. Furthermore, improved exchange rate expectations, particularly as the hryvnia strengthened in cash, aided in curbing the rise in prices for imported products.
Meanwhile, non-food prices rose more slowly due to improved exchange rate and inflation expectations, particularly for personal care products, clothing and footwear, electronics, pharmaceuticals, furniture, household appliances, and cars.
The growth rate in the cost of services remained nearly unchanged, although travel, catering, and hotel services, as well as rent, rose more slowly, possibly due to an improvement in the energy supply situation, weaker demand, and high comparison base effects created by the large-scale displacement of people at the beginning of the full-scale invasion.
The Ministry of Economy predicts that the inflation rate will reach 24% by the end of 2023, according to Ukrinform.