NBU: Prices for 71% consumer basket items rose above inflation target in Q2 2025

MOSCOW. Aug 1 (Interfax) - The prices for 71% of the consumer basket's components in Ukraine rose higher than the 5% inflation target as of July 18, 2025 from the end of Q1 2025, including the prices for 64% of said components rising higher than 10%, the National Bank of Ukraine (NBU) said in its July inflation report, according to Ukrainian media.

"As a result, price growth above the 5% inflation target currently covers 71% of the consumer basket items, and that above the 10% attention threshold covers 64% of them, compared to 55% at the end of Q1," it said.

This has influenced inflation expectations of households and banks, which somewhat deteriorated, although they still remained significantly below the actual inflation rate. Thus, the retrospective component's impact on shaping inflation expectations was limited.

At the same time, inflation expectations of financial analysts have somewhat improved, indicating their confidence in the temporary nature of the current inflation surge and in the NBU's measures to return inflation to the target level, it said.

Web search statistics also shows that, after declining from its peak early in 2025, households' attention to the topic of inflation has been relatively stable since March, although it somewhat grew in June and July.

"Considering that the price peak has in fact been passed and inflation expectations remain relatively stable, inflation is expected to decrease significantly by the end of the year and to move further toward the 5% target," it said.

The NBU expects that the dynamics of inflation in the coming months will largely depend on the actual impact of weather conditions on the supply and prices of agricultural products.

According to the NBU's preliminary estimates, headline inflation may rise slightly in July while core inflation will continue to decline. In the following months, inflation is expected to gradually take the steady decline trajectory. Fundamental price pressure is projected to weaken in the medium term, primarily owing to the fact that the NBU keeps pursuing a relatively tight monetary policy.

"Food inflation will slow down in H2, although it will still be higher than was earlier anticipated, primarily due to a poor harvest of certain crops and growing meat prices," it said.

At the same time, administratively regulated prices will grow faster within the forecast period, primarily due to higher excise duties and the need to gradually bring prices for certain utilities closer to economically feasible levels.

As reported, the NBU worsened its inflation forecast to 9.7% in 2025 and to 6.6% in 2026, expecting inflation to return to the 5% target only in 2027 due to heavy price pressure, consequences of the crisis, poor harvest, and the hryvnia's weakening against the euro.