Inflation to slow to 9.6% at year-end – NBU

The National Bank of Ukraine (NBU) projects that inflation will slow to 9.6% at the end of 2021 and then will gradually return to 5% target in 2022.

"Having peaked in September–October, inflation will begin to decelerate to reach 9.6% at the end of 2021. In 2022, it will decline to its 5% target and stay close to it going forward. Ukraine's real GDP will rise by 3.1% in 2021. After that, the Ukrainian economy will grow by about 4% a year," the central bank wrote in its inflation report for October 2021, Ukrinform reports.

The NBU also remained its inflation forecast for 2021–2023 unchanged. However, tighter monetary conditions will be necessary in the years ahead to bring inflation back to 5%.

"The pass-through of this year's strengthening of the hryvnia to consumer prices amid high crop yields will reverse inflation dynamics in late 2021. This reversal will also be driven by the steps the NBU has taken previously, including its key policy rate hikes (by 2.5 pp since the year started, to 8.5% per annum) and the rollback of its emergency measures. These steps have almost offset the stimulus effect of monetary conditions this year, and will ensure a transition to neutral conditions next year," reads the report.

According to the NBU, as a result, inflation will slow to 9.6% in December 2021 and return to the NBU's medium-term target of 5% in late 2022.