Inflation in Ukraine accelerated to 12% in 2024

Consumer prices exceeded the forecasts of the National Bank and the Ministry of Economy

In 2024, inflation in Ukraine reached 12%, exceeding the previous year’s figures (5.1%) and government forecasts. According to the State Statistics Service, consumer price growth slowed to 1.4% in December from 1.9% in November, but the annualized inflation rate increased to 12% from 11.2% in November.

At year-end, core inflation amounted to 10.7%, which is significantly higher than the 4.9% target for 2023. In December, it increased by 1.3%, returning to the level of October. The main drivers of growth remain food prices, which rose by 1.8% in December, including oil, dairy products, and bread. Alcoholic beverages and tobacco products added 2%, while clothing and footwear fell by almost 4%.

The deterioration in inflation forecasts at the end of the year did not meet even adjusted expectations. The National Bank of Ukraine expected 9.7%, the Ministry of Economy – 9.5%. The actual figures posed a serious challenge to the economy.

The government and the NBU forecast that inflation will slow to 6.9% in 2025. However, current macroeconomic trends indicate the need for a prompt response to curb price pressures and maintain social and economic stability.

It is worth noting that 2023 was a kind of respite for Ukraine in the context of inflationary pressures. After a rapid rise to 26.6% in 2022 caused by the full-scale war, inflation slowed to 5.1%. This became possible due to the stabilization of the hryvnia, the establishment of logistics chains, and the NBU’s restrained monetary policy.

Despite the economic challenges, Ukrainian businesses are cautiously optimistic about the prospects for 2025, budgeting for an average dollar exchange rate of UAH 44 per dollar and forecasting an improved investment climate. This optimism reflects the desire of businesses to adapt to the new environment, although higher prices may be an additional challenge for both businesses and consumers. Inflation is expected to reach 9.7% in the state budget for 2025.