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The National Bank expects further growth in inflation, with a slowdown by the end of 2021.
Prices will peak in the middle of the year, the NBU reports.
"Inflation will reach its peak values in the middle of this year, but subsequently it will start slowing down and return to the target range in the first half of 2022," the report reads.
Read also NBU: Ukraine's foreign trade balance in Jan sees $260 mln surplus The National Bank notes that in early 2021, inflation accelerated and, as expected, went beyond the target range. In January, consumer prices grew 6.1% in annual terms.
According to tentative estimates, inflation kept accelerating in February as well.
The regulator says in the first months of this year, prices for food and fuel had the greatest impact on higher inflation.
This is due to worse harvests and skyrocketing prices on global commodity markets amid a dynamic recovery in the global economy.
"Inflationary pressure from trading partner states will continue to intensify. Domestic consumer demand remains stable. In addition, price dynamics continue to reflect the effects of last year's hryvnia weakening," the NBU said.
A fairly rapid recovery of the global and Ukrainian economies will create tangible inflationary pressures throughout the year. However, the arrival on the market of a new crop, the exhausted effect of the low comparison base for individual goods, as well as the increase in the NBU key rate, will gradually shift inflation dynamics. At the end of the year, as per NBU forecasts, inflation will slow down before consolidating within the target range of 5% ± 1 p.p in the first half of 2022.
Inflation and NBU outlooks
Read also Latest expert outlook for hryvnia rate by year-end On August 3, 2020, the National Bank of Ukraine improved its inflation forecast in Ukraine in 2020 to 6% from 4.8% predicted earlier, while keeping it within the target range of 5% +/- 1 pp.
The National Bank of Ukraine predicted inflation to enter the target range of 5% +/- 1 percentage point by the end of 2020 due to the gradual recovery of global economy and the rise in energy prices.
Consumer inflation in Ukraine in September 2020 in annual terms amounted to 2.3%, slowing down from 2.5% in August.
In October 2020, inflation rose 2.4% on year, accelerating from 2.3% in September.
In January 2021, inflation went up 6.1% on year, accelerating from 5% in December.
Reporting by UNIAN