Photo from UNIAN
In recent months, price hikes have been driven by lively consumer demand.
The National Bank of Ukraine expects inflation to enter the target range of 5% +/- 1 percentage point by the end of the year and further increase in consumer prices in the coming months.
The NBU report says November consumer prices rose by 3.8% on year and also by a noticeable 1.3% against the previous month – the pace higher than the regulator had foreseen.
"A significant contribution was made by the increased cost of natural gas on the European market, which affected domestic utility tariffs for gas, heating, and hot water. Also, prices for certain grocery items have skyrocketed due to a worse harvest and the associated rise in global prices," the central bank said.
Lively consumer demand has also supported price increases in recent months, the NBU adds.
Rising incomes and worsening expectations, including due to the quarantine-related uncertainty, prompted citizens to spend heavily, as evidenced by growth in retail trade. This also contributed to a stronger economic recovery in H2 2020.
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As for quarantine-related curbs the government scheduled for part of January 2021, the National Bank says they will also have little effect on economic activity, consumer demand, and inflation, accordingly.
"At the same time, balanced monetary and fiscal policies will contribute not only to returning to economic growth, but also to maintaining moderate inflation rates in the future," the NBU said.
Forecasts
The National Bank of Ukraine suggested inflation would enter the target range of 5% +/- 1 percentage point by year-end due to the gradual recovery of the global economy and the rise in energy prices.
Consumer inflation in Ukraine in November 2020 in annual terms amounted to 3.8%, accelerating from 2.6% in October.
Inflation in 2019 slowed down to 4.1%, hitting a six-year low.