In December 2024, inflation accelerated to 12.0% in annual terms, and in monthly terms, prices increased by 1.4%. The actual inflation rate exceeded the National Bank’s forecast published in the October Inflation Report. This was reported by the NBU press service, citing data from the State Statistics Service.
The main factors of the growth were:
- Rapid increase in food prices due to lower harvests.
- Increased business costs for energy supply and labor.
- Weakening of the hryvnia exchange rate, which affected the prices of imported goods.
Raw products rose by 13.2%
Prices for raw products in December increased by 13.2% in annual terms. However, compared to November, there was a certain slowdown in the growth of prices for chicken, eggs, vegetables and fruits due to increased supply and increased imports.
At the same time, the growth in prices for flour, cereals and milk accelerated due to the increase in the cost of raw materials. The decline in prices for sugar and pork also slowed down.
Core inflation reached 10.7%
Core inflation at the end of the year was 10.7%. The highest growth rates were demonstrated by processed food products – by 14.7% in annual terms. The main reasons were:
- Increase in production costs.
- Revival of external demand.
Exchange rate effects.
This affected the prices of bread, flour and confectionery products, meat and dairy products. Sunflower oil, tea, fish, seafood, coffee and chocolate also rose faster.
Growth in the cost of services
In 2024, prices for services increased by 12.5%. In December, the growth rate accelerated due to higher prices for healthcare, transport, communications, recreation, restaurants and hotels.
Administered prices
During the year, administered prices increased by 16.3%. In December, tobacco products, alcoholic beverages and pharmaceuticals became significantly more expensive due to higher excise taxes, exchange rate effects and the fight against the shadow market. At the same time, a moratorium on increasing tariffs for housing and communal services for the population restrained administrative inflation.
Fuel prices
In 2024, fuel prices increased by 4.8%. In December, price growth moderately accelerated due to preparations for the increase in excise taxes from January 1, 2025, exchange rate dynamics and raw material costs.
Inflation is likely to continue to increase in the first months of 2025. The main factors will be temporary effects associated with lower harvests; fundamental price pressure due to rising business costs and the impact of the weakening hryvnia exchange rate.
At the same time, the National Bank expects that inflation will gradually return to a downward trajectory next year and will continue to move towards the NBU’s target of 5%. This will be facilitated by the gradual improvement of the situation in the energy sector, the expected increase in yields, the weakening of external price pressure, as well as the NBU’s interest rate and exchange rate policy measures.
We add that inflation is expected to continue to decline in 2026 and reach the 5% target against the background of an improvement in the situation in the energy sector and an increase in yields.
