Government expects inflation to slow to 5.9% in 2027

The government has forecast that inflation in Ukraine will remain below 10.4% on an annual basis over the next two years, with a further slowing to 5.9% in 2027. This information is set out in the Budget Declaration for 2025-2027.

The relevant resolution of the Cabinet of Ministers, No.751 of July 28, 2024, was published on the Government portal, Ukrinform reports.

"Over the forecast horizon of 2025-2027, the growth rate of consumer prices in the domestic market is expected to gradually slow down, with an expected 5.9% year-on-year in 2027," the document says.

At the same time, the consumer price index is projected to increase by 9.5% in 2025 (from December to December of the previous year) and by 10.4% in 2026.

In the medium term, the NBU's monetary policy will return to the inflation targeting regime, the authors of the Budget Declaration noted.

As for 2024, the price dynamics in the consumer market by the end of the year will be influenced by a number of multidirectional factors.

“On the one hand, the continuation of the moratorium on raising utility prices and tariffs, along with the general decline in consumer demand due to elevated security risks and the saturation of the market with commodity supply, will exert a restraining influence on the dynamics of consumer prices. Conversely, the upward trend in prices will be influenced by cost factors, including previous price increases by producers, new destruction, and higher logistics costs. Additionally, limited financial resources of business entities will contribute to this trend,” the declaration says.

As previously reported, the National Bank of Ukraine expects inflation to accelerate moderately in the coming months of 2024. This is due in part to continued pressure on business costs amid the war and slightly lower harvests.