The National Bank of Ukraine forecasts that the rise in fuel prices caused by the war in the Middle East could lead to an increase in inflation in Ukraine in 2026 by 1.5–2.8% compared to what it would have been without this war. The main impact comes from the rising prices of petroleum products, which have already affected the economic situation in the country.
This is reported by Finway
Rising Fuel Prices and Their Consequences for Inflation
According to Deputy Head of the NBU Volodymyr Lepushynskyi, the direct impact of rising fuel prices on inflation this year is estimated to be between 0.5–1 percentage points, while secondary effects could be nearly twice as high. He noted that the March increase in fuel prices, caused by geopolitical events in the Middle East, has already added 0.4 percentage points to inflation in Ukraine. As a result, the inflation trend that was expected closer to the middle of the year has changed earlier, and inflation in March accelerated to 7.9%.
“Overall, the direct impact on inflation from rising fuel prices this year could be between 0.5 and 1 percentage point, while secondary effects could be nearly twice as high. This means that inflation in 2026 could be 1.5 – 2.8% higher than it would have been if there were no war in the Middle East,” the statement said.
Secondary Effects and Actions of the National Bank
In addition to energy resource costs, inflation is also influenced by a number of other factors. Some of these contribute to further price increases, while others, on the contrary, restrain inflationary pressure. The final assessment of the impact will be presented in the updated macroeconomic forecast of the NBU.
The direct effect of the war in the Middle East on Ukraine’s GDP is currently assessed as limited; however, secondary consequences may be significantly more pronounced. In particular, this concerns the substantial depletion of global stocks of weapons needed for Ukraine, as well as the increase in revenue for the Russian Federation from oil exports. Despite this, the rise in oil prices will not fundamentally resolve the economic problems of the Russian Federation, but will provide it with additional resources.
In response to the emerging risks, the National Bank of Ukraine kept the discount rate unchanged in March, although a decrease had previously been forecasted. Further actions by the NBU will depend on the dynamics of inflation expectations: if risks persist, the rate-cutting cycle will be postponed, and if risks intensify, the rate may even be increased. Additionally, the NBU continues to support the stability of the currency market.
It is worth noting that the global fuel crisis could significantly impact the cost of producing Ukrainian agricultural products. According to optimistic estimates, costs could rise by 5–10%, while under a pessimistic scenario, they could increase by up to 20%.