NBU keeps inflation forecast for 2018 amid possible gas price hikes in keeping with IMF requirements

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The National Bank of Ukraine (NBU) has left unchanged the forecast for inflation at the end of 2018 at 8.9 percent, according to the Central Bank website.

“The NBU keeps its inflation forecast for year-end 2018 unchanged at 8.9 percent. A faster-than-expected disinflation in May–June 2018 will be neutralized in the second half-year. This is due to expectations of a greater-than-expected increase in administered prices at the end of the year, which is aimed at bringing domestic gas prices closer to the import parity price, and the subsequent rise in utility services prices,” the NBU said on July 12.

The central bank says this factor will also influence inflation levels in the first three quarters of the next year, which will not allow the regulator to bring inflation to the target range before Q4 2019. “However, this factor is beyond the reach of monetary policy and thus monetary policy tools cannot be used to neutralize it,” it said.

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