Ukraine’s inflation exceeded double digits for the first time since November 2018 rising to 10.2%, according to Ukrstat, as the central bank prepares for another interest rate hike in September.
The National Bank of Ukraine (NBU) has hiked interest rates in March (50bp) and April (100bp) but argued that pressures were receding and left them flat in June. But as inflation continues to clime the NBU hiked aggressively in August adding another full percentage point to the rate.
Data released on August 9 shows that price rises are not slowing yet and increased 10.2% from a year earlier in July versus 9.5% in the previous month, pulled up by global food and energy costs. The median estimate in a Bloomberg survey was for a 9.9% advance.
Inflation has reached its highest level since May 2018, driven by strong demand for food items such as eggs, sugar and sunflower oil and a sharp rise in energy costs.
A low base of comparison also means a quick drop in annual inflation rate can’t be expected until the first half of the next year, said Mykhaylo Demkiv, an analyst at Kyiv-based investment firm ICU told Bloomberg. “That will lead to the central bank increasing the key rate to 8.5% and possibly beyond.”
The inflation surge this year comes as a disappointment after the NBU crushed inflation in 2019 bring it down to post-Soviet lows.