In March of 2021, consumer inflation accelerated to 8.5% yoy (up from 7.5% yoy in February). In monthly terms, prices grew by 1.7%. This is according to data published by the State Statistics Service of Ukraine. Actual consumer inflation came out higher than had been projected in the January 2021 Inflation Report. Inflationary pressures were generated by the rise in prices for certain foods and fuels and sustained consumer demand. However, inflation was somewhat constrained by a price ceiling for natural gas.
Core inflation accelerated (to 5.9% yoy from 5.6% yoy in February).
Price increases for processed food products sped up (to 8.7% yoy).
The growth in services prices accelerated (to 7.3% yoy)
Nonfood prices rose less quickly (by 1.8% yoy).
Growth in raw food prices picked up (to 11.8% yoy).
Administered prices rose at a higher pace (by 13.0% yoy).
Fuel prices increased sharply (by 12.2% yoy), driven by higher global oil prices and sustained robust demand from the public.
In the next few months, significant inflationary pressures will persist due to the pass-through effects of high global food prices, elevated energy prices, and growing consumer demand even as the lockdown remains in force. In Q4 2021, inflation will start to descend and will reenter the 5% ± 1 pp target range in H1 2022. This will occur thanks to the new harvest supplies coming to the market, the effect of a low comparison base fading for some products, and the impact of the NBU’s key policy rate hike.