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Inflation accelerated in Ukraine: NBU explained the high rate of price increase

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Core inflation in June turned out to be higher than forecasted. Photo: Pixabay

Core inflation in June turned out to be higher than forecasted. Photo: Pixabay

In June 2021, consumer inflation in Ukraine remained at the same level: over the year it increased by 9.5%. However, consumer prices on a monthly basis increased by 0.2%. The National Bank explained the reason for the price increase.

Core inflation in June increased from 6.9% to 7.3% (+0.4%), and that is significantly more than the NBU had forecast in April—6.5%.

Food prices increase

Amid the global increase in food prices, in June food prices increased by 12.1% in Ukraine. The prices for sunflower oil and products of its processing went up to the maximum. Also, due to the increase in producers' costs for raw materials and energy, the prices for pasta, confectionery, meat and dairy products have risen significantly.

The increase in prices for raw food products slowed to 5.1% due to the production growth and increased supply on the market. Berry prices began to fall seasonally. The rise in milk prices has intensified due to the increased cost of feed and the reduced production. Sugar also rose in price on the Ukrainian market due to the poor harvest of sugar beet.

Non-food goods and services

For comparison, non-food goods rose in price by only 1.8%. The biggest increases were seen in pharmaceuticals, furniture, personal care products, household appliances, and electronics.

The increase in prices for services amounted to 8.1%. Due to high consumer demand and increased costs, the prices for catering, culture, recreation, personal transport insurance, cable TV, Internet, and taxis rose the most.

Rising prices for gas, transport, and alcohol

Administratively regulated prices increased by 18%, mainly due to the sharp increase in gas prices on an annualized basis. At the same time, on a monthly basis, prices for "blue fuel" increased insignificantly.

Also in June, prices for access to public transport increased. Alcohol prices also rose—the main driver was the increase in prices for beer.

Context. On June 10, the Cabinet of Ministers published a government macroforecast for 2022-2024. Among other figures, there is also the estimated inflation rate. According to it, the average annual inflation in 2022 will be 7.2% at the beginning of the year and 6.2% by the end of the year, in 2023 its figures will be 6% and 5.3%, and in 2024—5.2% and 5 % respectively.

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