Price growth slowed in Ukraine in March 2023

According to the NBU, the sharp decrease in inflation is associated with a significant supply of food and fuel, a better situation in the energy sector, an improvement in inflation expectations and a favorable situation in the monetary segment of the foreign exchange market.

“At the same time, the slowdown in inflation is largely explained by the effects of last year’s relative base,” the NBU added.

Appreciation Processed food products Significantly decreased (up to 23.5% y/y). As in February, this was largely due to a better-than-expected energy situation. Thus, prices of bread and flour products, snacks, soft drinks and canned goods grew at a slower rate. With adequate supply in the domestic market and low export prices, prices of dairy products and sunflower oil grew slowly.

“Improving exchange rate expectations, especially against the backdrop of strengthening of the hryvnia exchange rate, contributed to a decrease in the rate of increase in prices of imported goods,” noted the NBU.

Price increase for Non-food items Also decreased significantly (18.8% y/y). On the one hand, such dynamics were expected due to the effects of the previous year’s comparative base. On the other hand, prices for personal care products, clothing and footwear, electronics, pharmaceuticals, furniture, household appliances and cars grew slowly due to improvement in exchange rate and inflation expectations.

growth rate Cost of services Almost unchanged (15.4% y/y). Services and rental prices of tourist services, public catering establishments and hotels increased slowly. “This can be explained by the energy supply situation created by the large-scale displacement of the population at the beginning of the full-scale invasion, the weak demand and the effects of the relatively high base,” notes the NBU. .

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In contrast, the prices of medical, insurance, veterinary, telecommunications and beauty salon services grew faster – under the influence of increased costs and lower supply, against the backdrop of a gradual recovery in demand. Also, considering the high demand for maintenance, the cost of services of electricians and plumbers has accelerated.

Rate of price growth Raw foods 31.6% YoY decline.

Milk prices grew slowly due to insufficient supply amid weak demand and low world prices. Prices of flour, cereals and sugar rose at a slower rate, considering last year’s harvest was sufficient to meet domestic demand. Growth in meat prices was dampened by the effects of low feed prices and weak demand. Low import prices and favorable conditions in the foreign exchange market led to a slowdown in the prices of citrus fruits and bananas.

At the same time, the prices of greenhouse vegetables and carrots increased at a higher rate, while the rate of decline in cabbage prices decreased. This is primarily due to fatigue from the temporary effects of warm weather during the winter months.

officer Administratively regulated prices Declining to 13.5% y/y. Under the influence of adequate import supply and the strengthening of the hryvnia exchange rate, the prices of tobacco products and alcoholic beverages increased slowly, the latter due to weak demand. Growth in prices for transport services has moderated due to stabilization of fuel prices. The ban on increasing the rates for housing and communal services for the people continued to curb administrative inflation.

Inflation has come down significantly Fuel – up 27.9% y/y. This is explained by significant reserves and a decrease in world oil prices.

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As noted in the review, inflation is lower than the NBU’s forecast for the third month in a row due to the priority of food supply over demand, better conditions in the energy sector and the NBU’s stable monetary policy. Maintaining exchange rate stability and increasing the attractiveness of hryvnia savings.

Improvements in inflation and exchange rate expectations further contribute to easing underlying inflationary pressures.

“At the same time, risks to inflationary dynamics persist primarily due to high uncertainty associated with the war,” the NBU added.

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