Inflation reached 10% in 2021 - NBU

"In 2021, consumer inflation was 10%. The target of 5% ± 1 p.p. was exceeded more significantly than expected a year ago. To a large extent, inflationary trends in Ukraine reflected global processes," the report says.

The National Bank noted that consumer inflation accelerated worldwide and was the highest in decades in developed countries. In general, global inflation is the result of a sharp recovery in demand (given the large-scale fiscal and monetary stimulus) and its reorientation to certain groups of goods and services against the background of slow recovery of supply due to disruptions in production and supply chains.

As a result, there was a sharp increase in prices for energy resources, raw materials and certain production components. All this was aggravated by the widening of labor market disparities due to the pandemic, which resulted in a sluggish return to labor, and a high level of voluntary redundancies in some countries due to changing workers' priorities. At the same time, there is a significant increase in the demand for workers in some fields, such as IT and healthcare.

As a result, external demand fueled labor migration and stimulated further costs on paying salaries. These processes, on the one hand, were translated into significant imports of inflation. On the other hand, they contributed to the strengthening of the hryvnia due to the high share of commodities in exports and revenues from labor migration, which restrained rising prices.

Inflation was accelerated by domestic factors as well, in particular, in contrast to previous crises, consumer demand was rapidly recovering.

As Ukrinform reported, according to the National Bank's forecasts, inflation will slow to 7.7% this year, but its return to the central bank’s target of 5% is expected at the end of 2023.

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