KYIV – Ukrainian inflation will reach 9.9% in July, its highest in two-and-a-half years, and will remain close to double digits in the coming months, a Reuters poll of analysts showed on Friday.
Inflation last hit 9.8%-10% in 2018 before slowing down to the central bank’s 5% range at the end of last year. It shot back up in recent months, prompting the central bank to raise interest rates three times.
Inflation hit 9.5% in May and June. The median forecast of 10 analysts suggests it may ease to 8.6% in December 2021, though the highest forecast in the poll sees it at 10.1% by the end of the year.
The polling data casts down on the central bank’s ambition to bring inflation back into its 5% target range next year, the analysts said.
“Inflationary pressure in the economy remains strong and systemic, both on the demand and supply side. We do not see solid grounds to expect inflation to return to the central bank’s target range … in 2022,” said Oleksiy Blinov from Alfa-Bank Ukraine.
A recovery in private spending was driving inflationary pressure on the demand side, he said, while rising energy prices were causing inflationary pressure on the supply side.
Retail sales grew by 13.8% in the first half of 2021 although economic growth was weak. The economy grew 0.7% year-on-year between January to May, according to preliminary state data, after a 4% contraction last year due to the pandemic.
Ukraine’s State Statistics Service plans to publish July inflation data next week.
The government of Ukraine, one of Europe’s poorest countries, expects an economic bounceback this year but the central bank has warned about the risks of a resurgent coronavirus and delays in securing International Monetary Fund financing.