Inflation in Ukraine is rapidly declining: why this happens during the war

The regulator notes that consumer inflation rates in annual calculation decreased to 12. 8% of 15. 3% in May. "Low rates were caused by a large supply of food and fuel, a decrease in world prices in commodity markets, as well as to improve inflation and exchange rate expectations against the backdrop of a sustained situation in the cash market," the NBU noted. According to the NBU, the rise in price of processed foodstuffs slowed down to 14. 7%.

Such dynamics first of all reflected a decrease in the pressure on business costs, in particular logistics, as well as raw materials and energy given their sufficient supply. In particular, bread prices and bread products were increasing. And, against the background of decreased global prices and poor demand, the rates of rise in dairy products have decreased, and sunflower oil even fell in the annual calculation.

The steady course policy has helped to reduce the growth rate of prices for products that are most often imported. The rate of rising prices for raw foods is also reduced. According to the NBU, the decrease was 18. 2%. Yes, the rise in prices of milk, pork and chicken occurred smoothly due to restrained demand, and the cost of eggs was restrained against the background of a growing supply. Low export prices and sufficient reserves of grain kept the rise in price of cereals and flour.

The decline in rise in sugar is also recorded as the world prices have decreased and the domestic market does not feel deficiency in this product. The National Bank also adds that due to a sufficient supply and a sustained situation in the foreign exchange market, the prices for vegetables and fruits were slower.

As the head of the Tax Committee of the Parliament Danilo Getmantsev explained in his Telegram-channel, in July the potential before the further reduction of annual inflation will be exhausted in July, as the effect from the highest comparison base in 2022 will disappear. Moreover, inflationary processes will be influenced by the effects associated with the return of pre -war taxes on fuel and the blast of the Kakhovka hydroelectric power station.