In May 2025, consumer inflation in Ukraine rose to 15.9% year-on-year, marking the highest rate since the beginning of the year. This exceeded the forecasts of the National Bank of Ukraine (NBU) and raised concerns about future economic trends.
This is reported by Finway
Key Factors Behind Inflation Growth
According to the NBU’s July “Macroeconomic and Monetary Review,” the main driver of price increases was a significant rise in the cost of raw food products. In particular, prices for livestock products, including milk, meat, and eggs, as well as certain vegetables and fruits, saw substantial increases. The reasons for this included rising production costs, a decrease in livestock numbers, and adverse weather conditions affecting crop yields.
At the same time, core inflation in May slowed to 12.3%. The NBU explains this dynamic by the stability of energy supply and the impact of high interest rates, which helped reduce fundamental pressure on price growth.
Administrative Impact and Outlook
The administrative component of the consumer price index, which includes alcohol, tobacco, and utility services, increased to 19.8% year-on-year. The main reasons were tax adjustments for excise goods and rising production resource costs.
“However, in June, according to NBU estimates, overall inflation began to decline — particularly due to a reduction in administrative impact and base effects, as there was a one-time increase in electricity tariffs last June, which did not occur this year.”
The National Bank forecasts a slowdown in annual inflation in the second half of 2025, provided that stable energy supply is maintained and no new shocks occur in the food market. Despite a slight deterioration in inflation expectations among businesses and the public, these expectations remain lower than the actual rate of price growth.