Price dynamics slowing down: Ministry of Economy's forecast for the coming months

Recently, Ukrainians have been experiencing a dampening in price growth, and according to the Ministry of Economy's forecast, this trend should continue at least in the coming months. According to the Ministry's June 2023 Inflation Survey, the main factor behind the 0.8% increase in consumer prices for the month was an increase in electricity tariffs for households.

Given the ongoing military shocks and their impact on supply, especially in the electricity market, the tariff increase led to an 11.9% increase in the overall price level in the Housing, Water, Electricity, Gas, and Other Fuels group, contributing 1 percentage point to inflation. There was also a 13.8% increase in the cost of local telephone services and a 3.1% increase in the cost of railroad transportation.

Seasonality is an important component of maintaining price stability. In the context of restrained demand due to the military context and a relatively stable hryvnia exchange rate, the manageability and predictability of the consumer market ensure relative price stability.

Annual inflation rates are also showing a downward trend, as evidenced by a slowdown in the index growth of 12.8% in June (compared to 15.3% in the previous month).

However, the cost of meat and meat products continues to rise due to an imbalance in supply and demand in the market. For example, prices for fresh, chilled and frozen pork increased by 3.8%, and prices for fresh, chilled and frozen beef and veal by 2.3%.

In general, according to the Ministry of Economy's forecast, under conditions of controllability and stability, inflation is expected to decline in the future, although its fluctuations will remain relevant on a monthly basis.