NBU improves 2024 inflation forecast to 8.2%, worsens 2025 outlook to 6%

MOSCOW. April 25 (Interfax) - The National Bank of Ukraine (NBU) has improved its 2024 inflation forecast to 8.2% from 8.6%, while consumer prices are projected to increase 6% in 2025 instead of 5.8%.

"As before, the NBU forecasts a moderate increase in inflationary pressure as the effects of last year's strong harvests come to an end, consumption continues to recover and business costs [...] rise. At the same time, given the improved dynamics of actual inflation and better inflation expectations, the NBU has lowered its 2024 inflation forecast, from 8.6% to 8.2%," Ukrainian media reported, quoting NBU Governor Andrei Pyshny.

He said that in the coming years, inflation will return to the target range of 5% +/-1%, including 6% in 2025. Consumer prices are still expected to rise 5% in 2026.

"This will be facilitated by a gradual normalization of conditions in which the economy functions, an easing of external inflationary pressures, and the NBU's consistent monetary policy," Pyshny said.

He said the risk of insufficient international financing this year has eased considerably, but the risks to regular financing remain.

Other risks that remain significant are related to covering substantial quasi-fiscal deficits, in the energy sector in particular; port infrastructure, which will limit economic activity and put supply-side pressures on prices; blockades of freight transportation at border crossings with neighboring EU countries; and worsening trends in migration.

"At the same time, a number of positive scenarios are still likely to materialize, including further expansion of export opportunities, the transfer of funds from immobilized Russian assets to Ukraine, the acceleration of European integration processes, and the implementation of Ukraine's large-scale recovery program," Pyshny said.

As reported, inflation in annual terms fell to 3.2% in March from 4.3% in February and 4.7% in January.