Ukraine: Inflation reaches highest level since September 2023 in July
Inflation rose to 5.4% in July, which was up from June’s 4.8%. Despite meeting market expectations, July’s reading represented the highest inflation rate in almost a year and exceeded the midpoint of the National Bank of Ukraine’s (NBU) 4.0–6.0% target for the first time in 2024. Looking at the details of the release, prices for food and non-alcoholic beverages rebounded, partly due to a strong base effect. Prices for housing, water, electricity, gas and other fuels also remained elevated, rising at a similar pace compared to the previous month’s reading.
The trend pointed down, with annual average inflation coming in at 5.0% in July (June: 5.5%). Meanwhile, core inflation rose to 5.7% in July from the previous month’s 5.0%.
Finally, consumer prices were unchanged from the previous month in July, coming in below the 2.19% increase seen in June. July’s result marked the in prices since August 2023.
Goldman Sachs analysts Andrew Matheny and Johan Allen commented on the outlook for inflation and interest rates:
“The [July] CPI print raises the probability that the NBU chooses to stay on hold at the upcoming MPC, in line with NBU communication, although we continue to expect that there will be room for further cuts at later MPC meetings towards the end of this year. […] In the months ahead, we expect the combination of base effects and pass-through from the recent the exchange rate depreciation to ‘mechanically’ push inflation above the target range, where it should remain through the end of the year.”