In December 2024, inflation accelerated to 12.0% yoy. In monthly terms, prices rose 1.4%. This is according to data published by the State Statistics Service of Ukraine.
Actual consumer inflation in December 2024 was above the forecast the NBU outlined in its October 2024 Inflation Report. On the one hand, temporary factors remained a significant driver of the price growth, and the main reason for the deviation of price developments from the forecast. The primary driver was a sharp increase in raw-food prices due to lower harvests. On the other hand, underlying price pressures also intensified significantly amid further increases in the business costs of energy and labor. The effects of the hryvnia’s exchange rate depreciation also had a certain impact.
Raw foods rose in price by 13.2% in 2024
In December, the growth in the prices of raw-food products decelerated from November in annual terms. Specifically, prices for chicken and eggs grew somewhat more slowly amid an expanded supply, including thanks to warm weather. Prices for vegetables and fruits grew at a slightly lower pace due to increased imports. In contrast, the rise in prices picked up for flour, cereals, and milk, driven by higher raw material and production costs. The decline in sugar and pork prices decelerated.
Core inflation picked up to 10.7% in 2024
Prices for processed food products rose 14.7% yoy at the end of the year. The December acceleration in price growth is attributable to an increase in production costs, including the purchase prices of raw materials, as well as an uptick in external demand. As a result, prices for bread, flour, and confectionery products grew at a high rate, as did those for meat and dairy products. Sunflower oil prices also rose faster due to low processing volumes. Exchange rate effects drove a faster increase in the prices of certain imported goods, namely tea, fish, and seafood, as well as coffee and chocolate, including due to their limited supply on global markets.
Prices for non-food products increased 4.1% yoy in 2024, driven primarily by the exchange rate factor of previous periods. However, prices for clothing and footwear remained lower than last year.
Services prices grew 12.5% in late 2024, accelerating in December compared to November. In particular, prices for healthcare, transport services (including car maintenance), communication, recreation and culture, restaurant and hotel services, personal care, insurance, and financial services rose faster.
Administered prices increased by 16.3% in 2024
In December 2024, tobacco product prices rose more rapidly, likely due to manufacturers and importers raising prices ahead of the anticipated hikes in excise tax rates in 2025. Prices for certain alcoholic beverages also increased because of the higher excise tax, effective December, on intermediate alcoholic products and due to higher minimum wholesale and retail prices for wine products. For excisable products, price developments were also shaped by exchange rate effects and measures to combat shadow-market supply. Price increases for pharmaceuticals and healthcare products and equipment also gathered speed. Meanwhile, the moratorium on raising utility prices for households continued to restrain the growth in administered prices.
Fuel prices grew 4.8% in 2024
In December, fuel price growth accelerated moderately compared to November. In addition to raw-material costs and exchange rate developments, fuel prices were driven by tax and legislative changes, as well as by higher fuel imports as companies built up reserves anticipating the 1 January 2025 excise increase.
In the first months of 2025, inflation is likely to continue rising due to the persistent impact of both temporary factors, including the effects of lower harvests, and underlying drivers, such as pressure from business costs for energy and labor, as well as the effects of the hryvnia’s exchange rate depreciation.
However, the NBU expects inflation to return to a steady downward trajectory in H2 2025 and move towards the NBU’s target of 5% within the policy horizon. The NBU’s interest rate and exchange rate policy measures, as well as ampler harvests, improved energy sector situation, a narrower fiscal deficit, and subdued external price pressures will be among contributors to the slowing of inflation.
New data on price developments will inform the central bank’s monetary policy decisions and updated macroeconomic forecast. The latter, including an inflation projection for 2025–2027, will be made public on 23 January 2025 during the press briefing following the NBU Board’s decisions. For further details, see the Inflation Report, which will be published on 30 January 2025.