This year’s inflation will be higher than last year’s: what awaits Ukrainians in 2025
31 January 16:59
According to the State Statistics Service, inflation in Ukraine in 2024 was 12%. This is a rather high and negative figure for the Ukrainian economy, and it is getting worse. In 2023, inflation was 5%. The National Bank of Ukraine is traditionally optimistic in its forecasts. According to the regulator, in 2025, inflation will decline to 6.9%, and in 2026 it will reach the NBU’s target level of 5%.
However, the NBU’s forecasts are not an indicator that should be trusted unconditionally. After all, back in November last year, when the final figure for the year could already be predicted much more accurately than, for example, at the end of 2023, the NBU issued a forecast of 9.7%. Thus, practice shows that inflation is usually higher than the NBU’s forecast expectations. That is, the 6.9% figure can be considered the lowest inflation rate for the current year.
For example, economist Andriy Novak says that this year’s inflation rate will be even higher than last year’s 12%.
“The main reason for this is, of course, the continuation of the large-scale war, which, among other things, causes direct economic losses to Ukraine, Ukrainian businesses and citizens. This is the most important factor. The second factor of inflation is the rise in energy prices. After certain time lags, it is transferred to price increases almost throughout the entire economic system. This is because energy is a mandatory part of the cost of all goods and services, without exception,”
– said the expert in an exclusive commentary .
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Depending on the situation, individual commodity markets react to changes in energy prices in different time periods, but sooner or later, each market adjusts to changes in the energy market, the economist explains.
As for energy prices, they are growing and will continue to grow. For example, as it turned out unexpectedly, Ukraine has almost run out of gas in its storage facilities. And now it will have to be purchased for $500, not $300, as it was last summer. In addition, the expert reminds that the government does not even hide the fact that after the end of the heating season, we will face a new wave of rising prices and tariffs for energy.
“This will also provoke higher inflation rates throughout the entire economic system,” Novak adds,
– novak adds.
The expert summarizes that Ukraine’s overall living standards continue to decline, and there are no grounds to talk about significant positive changes in the economy.
“The income of most Ukrainians is growing at a lower rate than real inflation. This indicates a decline in living standards, especially for those people who have lost their homes or jobs or have been forced to move. According to official data alone, we have more than eight million internally displaced persons. Almost all of them have been living in a mode of very modest survival since the moment of resettlement,”
– summarizes Andriy Novak.