Inflation in Ukraine has significantly slowed, reaching its lowest rate since the commencement of the full-scale war – standing at 12.8% in June 2023 year-over-year, the Institute for Economic Research said in its latest monthly economic monitoring report.
Prices in June remained stable at the level of May, except for the increase in energy prices. The consumer price index, which had been rising by 3-4% per month at the beginning of the full-scale war, has now averaged a monthly increase of 1% over the past 12 months. This moderation in inflation was attributed to the limited purchasing power of consumers and the stable exchange rate of the hryvnia, which helped restrain the growth of import prices and reduce inflationary expectations.
In June, the consumer price index saw a modest increase of 0.8% compared to the previous month. However, this increase was primarily driven by an 83% hike in energy prices for most households and a 57% increase for households consuming over 250 kWh per month.
After excluding the impact of the electricity price changes, consumer prices in June remained largely unchanged on average, as the increase in prices for certain goods and services was balanced out by a decrease in the price of others. Additionally, fuel prices continued to decline in line with global trends during the month, although the expected resumption of pre-war taxes on fuel as of July 1 may potentially reverse this trend.
Among foodstuffs, the prices of cereals and vegetable oil continued to decrease due to substantial stocks, while meat and meat product prices continued to rise at high rates. Further-more, there was a seasonal decrease in clothing and footwear prices, accompanied by a seasonal increase in potato prices.
Previous reports suggested that the slowdown in inflation in June was influenced by various factors, including food supply dynamics, the strengthening of the hryvnia on the cash foreign exchange market, and improved inflation and exchange rate expectations.