NBU expects more moderate food price growth despite harvest losses due to frost

MOSCOW. June 6 (Interfax) - The National Bank of Ukraine (NBU) acknowledges the loss of a certain portion of the harvest of early fruits and berries and winter crops due to spring frosts, but the bank does not expect it to seriously impact the country's food inflation, Ukrainian media said.

"There were several more waves of frosts over the past month or month and a half, after we had already finalized and published our April forecast. Winter wheat, winter rapeseed, corn and horticultural crops were partly damaged. It can be said with a high degree of probability that a certain portion of the harvest of early fruits and berries has been lost," media outlets quoted NBU Deputy Governor Sergei Nikolaichuk as saying at a monetary policy briefing.

The NBU's April inflation forecast projected the country's grain harvest at 61.7 million tonnes in 2025. Agrarian Policy and Food Minister Vitaly Koval, for his part, said a few days ago that there could be a 10% reduction in Ukraine's 2025 grain harvest to around 51 million tonnes versus 56.7 million tonnes last year.

Meanwhile, Nikolaichuk did not offer any estimates of possible losses, adding that the impact will not be considerable for now, as farmers continue to adapt to climate change, including by sowing crops of different sorts.

"However, stone fruits may cost more this year than we expected, than we projected it in our April forecast," he said.

At the same time, the winter crop harvest faces moderate risks due to abundant rainfall over the past few weeks, Nikolaichuk said. However, the risks for a large group of spring crops are still relevant.

"Besides, it is necessary to take account of the fact that the gathering of crops from this year's harvest is also being delayed both by weather conditions and due to ongoing workforce shortages on the market," he said.

The NBU does not have any updated estimates at this point, as the monetary committee's interim meeting is still in progress, he said. The new forecast is still being prepared and will be made public later.

The NBU says today that the impact of weather conditions on the harvest of grain and other agricultural crops this year could be worse than anticipated in the current forecasts.

"Same as before, we believe today that this impact will be moderate, and, even if the situation follows a certain negative scenario and, as it was last year, there will again be negative weather conditions, it will be easier for us to rein in food inflation, because a substantial factor will be imports," Nikolaichuk said.

Food prices on the domestic markets have already neared those in neighboring countries, or are even higher for some foodstuffs, he said.

"Therefore, it is this factor that allows us to expect that we will be able to avoid last year's spike in food inflation rates," Nikolaichuk said.

NBU Governor Andrei Pyshny, for his part, said the forecast that inflation in Ukraine will decelerate to below 10% in 2025 remains valid.

As previously reported, the NBU worsened its inflation forecast for 2025 from 8.4% to 8.7%, but expects inflation to return to the 5% target in 2026.