Printing hryvnia: Economy ministry elaborates on reasons behind inflation

Ukraine's Ministry for Development of Economy, Trade, and Agriculture says inflation in the country may grow by the end of 2020, while dynamics will depend on the strengthening of the credit channel for the issuance of hryvnia, Ukraine's national currency.

"In the future, during 2020, a gradual increase in effective demand is expected, which will allow seeing (with insignificant fluctuations) restrained rates of consumer inflation, which, given a set of restraining factors, will be lower than expected at year-start," the Ekonomichna Pravda online newspaper wrote on August 18, referring to a review by the ministry's Economic Strategy and Macroeconomic Forecasting Department.

Purpose of hryvnia issue

Issuance of the hryvnia is used including for supporting businesses and implementing anti-crisis measures.

Read alsoUkraine's Central Bank: Inflation in July 2020 weighed down by slower growth in food pricesPrices will also be rising due to the increase in the component cost of goods, given the losses incurred during the quarantine and growing prices on the global market.

Inflation: Background

In July 2020, consumer prices in Ukraine fell by 0.6% after growing by 0.2% in June. Consumer inflation in July remained at 2.4% year-over-year (y-o-y).

Inflation in June 2020 accelerated to 2.4% y-o-y from 1.7% reported in May.

Inflation continues to accelerate gradually; however, it is still at the lower end of the target range of 5% ± 1 pp. Ukraine's National Bank predicts inflation in the country will accelerate in the second half of 2020, to 4.7% by the end of the year.

Ukraine's economy ministry projects a 4.6% growth in the country's GDP in 2021 amid 7.3% inflation.