NBU worsens inflation forecast for Ukraine in 2025 from 8.4% to 8.7%

MOSCOW. April 17 (Interfax) - The National Bank of Ukraine (NBU) has worsened its inflation forecast for 2025 from 8.4% to 8.7% and maintained expectations of its reversion to a 5% target in 2026.

"The inflation will bounce back to a decline this summer [...]. The expected increase in harvests will contribute to the reduction of food inflation from the third quarter of 2025 and its stabilization at a relatively low level in the future," NBU Governor Andrei Pyshny was quoted by Ukrainian media as saying at a press briefing on Thursday.

The NBU also worsened its forecast for core inflation this year from 7.8% to 8.9%, while slightly improving it for next year to 3.0% from 3.1%.

The core inflationary pressure will gradually ease thanks to the NBU's monetary policy, improvements in energy supply and lower labor market tensions, Pyshny said. An additional restraining factor will be lower oil prices due to global trade disputes.

The inflation was growing almost in line with the trajectory of the NBU's previous macro forecast in the first months of the year, and reached a 14.6% annual rate in March, Pyshny said.

He attributed such dynamics to the impact of the residual effects of last year's poor harvests, further price hikes on excisable goods, as well as fundamental factors, in particular, rising business spending on energy and labor costs, as well as robust consumer demand.

"The March survey showed further improvement in households' expectations, while statistics of Internet search queries revealed a decline in people's attention to the topic of inflation from peak levels at the beginning of the year," Pyshny said.

Pyshny added that inflation expectations of businesses and banks have slightly worsened. At the same time, despite the higher annual inflation, the overall level of inflation expectations among economic agents remains relatively stable.

As reported, the inflation rate in Ukraine, which fell to 5.1% in 2023 after soaring to 26.6% a year earlier, rose to 12.0% by the end of 2024.

The State Statistics Committee said that the inflation rate rose to 14.6% in March this year from 13.4% in February, while the core inflation rate edged up to 12.4% from 12.0%.

The NBU has already worsened its inflation forecast for 2025 from 6.9% to 8.4% in January.