Inflation accelerated to 24.6%, prices are rising because of war, - NBU
In September 2022, consumer inflation in Ukraine accelerated to 24.6% on an annual basis (from 23.8% in August). Despite depressed demand, inflationary pressure persists because of the war.
This was reported in the National Bank, Censor.NET informs.
"The main reason for the acceleration of inflation remains the consequences of Russia's full-scale war against Ukraine - the destruction of industries, disruption of supply and logistics chains, a decrease in the supply of goods and services, and an increase in business production costs," the report says.
According to the NBU, the additional pressure on prices was caused by the deterioration of the expectations of the population and business, as well as "the adjustment of the official hryvnia exchange rate in July."
"Inflation dynamics will continue to remain under control, and the actual acceleration of inflation is slower than the forecast of the National Bank.
At the same time, rather high risks of unfolding inflationary processes and further unbalancing of expectations remain, which increases fundamental inflationary pressure, despite suppressed consumer demand," the commentary reads.
According to the NBU, the growth rate of prices for non-food products increased to 18.8% y/y under the influence of the July adjustment of the official exchange rate of the hryvnia, limited supply of new batches of goods, depletion of old stocks and high logistics costs.
Thus, household goods (dishes, furniture, home textiles, household appliances, household chemicals), electronics, cars, medicines, personal care products, and repair goods rose in price at a faster pace. The growth of prices for clothes and shoes has resumed. The cost of several non-food products was also affected by the need to further restore or improve living conditions, in particular, due to the approaching cold weather.
The price increase of processed food products also accelerated (up to 25.5% y/y). "Such dynamics are associated with the growth of business production costs, in particular for raw materials, energy and logistics, high prices on world markets, as well as with the July adjustment of the official exchange rate.
The prices of dried fruits, fish products, and soft drinks, which are mainly imported, as well as sunflower oil, it's processing products (spreads and mayonnaise), and dairy products, the cost of which significantly depends on prices on foreign markets, growing at a higher rate. On the other hand, the price of bread increased more slowly, in particular thanks to the sufficient harvest of early cereals," the NBU noted.
The increase in the cost of services remained at the level of the previous month (15.6% y/y). On the one hand, the prices of medical services, the Internet, services of beauty salons, dry cleaning, and public catering establishments increased faster.
The return of citizens to their cities of residence and demand from internally displaced persons increased the pressure on the cost of housing rent. Together with the shortage of some consumables and labor force, this led to the acceleration of the growth of the cost of services related to housing repair. On the other hand, tariffs for financial services and the cost of higher education grew more slowly, the NBU comments.
The rate of growth of raw food prices has hardly changed (40.9% y/y). The increase in the price of imported fruits (bananas, oranges, kiwis) accelerated due to the increase in the cost of these goods on world markets, complicated logistics, and the effects of the adjustment of the hryvnia exchange rate in July. Prices for meat, in particular pork, grew at a higher rate due to a shortage of pig carcasses, as well as for eggs - due to a decrease in the number of chickens and an increase in production costs. Under the influence of the increase in the price of energy sources, sugar prices rose faster, the NBU notes.
Instead, the growth of prices for vegetables of the borscht variety (cabbage, beets, carrots, and potatoes) slowed down due to the expansion of the supply from the central and northern regions. The price of flour, buckwheat, and other cereals increased more slowly under the influence of positive expectations regarding the future harvest.
The growth of administratively regulated prices remained at the level of the previous month (14.7% y/y). Then, alcoholic beverages and tobacco products became more expensive due to the increase in business production costs. Due to the effects of the July exchange rate adjustment, the prices of imported drugs included in the list of state monitoring increased.
At the same time, tariffs for housing and communal services have hardly changed in annual terms. Against the background of the stabilization of fuel prices, the rate of increase in the price of transport services decreased.
The growth rate of fuel prices decreased (to 66.2% y/y). "This is explained by the further decrease in world oil prices and the saturation of the domestic market thanks to the improvement of logistics," the commentary reads.
