Inflation in Ukraine slowed to 2% from January to May 2024, the lowest rate in recent years. However, there are risks of rising prices in the near future.
This is stated in the review by the Ministry of Economy of Ukraine.
"The current 'sluggishness' of prices reflects changes in the economic structure during the war - suppressed consumer demand did not cover the gradual recovery of domestic supply, including due to the high harvest of 2023 and imports, which ensured market saturation despite limited export opportunities," the review states.
At the same time, the temporary surplus of supply only partially restrains inflation, and other factors of the food market (including seasonality) may dominate in certain months, continuing to determine the overall level of price growth, according to the ministry.
Additionally, there is increasing pressure from cost factors, particularly due to: the forced costly adaptation of businesses to operate under limited electricity supply; increased logistics costs; higher purchase prices for raw materials; and higher costs for maintaining personnel, including ensuring workplace safety.
All these factors ultimately reflect both the accelerated growth of prices for goods with higher added value and the rising costs of services, the ministry predicts.
"In the near future, it is expected that inflationary factors will continue to prevail – domestic prices will continue to depend both on global trends, considering their adjustments, and on the significant internal production costs resulting from the destruction of a large part of infrastructure, the need for further rebuilding of damaged energy facilities, and the restructuring of production processes," the review states.
Moreover, price growth will be stimulated by the uncertainty regarding the further course of the war and the likely deepening labor shortage.
