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4.2​ Inflation
NBU confirms 5% mid-term inflation target, aims to promote crediting.
The Council of the National Bank of Ukraine (NBU) announced on September
10 the approval of its "Basic Principles of Monetary Policy for 2021 and the
Mid-Term,", which had been submitted by NBU Board. The document is based
on the NBU Board's official Monetary Policy Strategy approved in 2018. The
document states that the NBU will continue its policy of inflation-targeting with
a target rate of 5% +/- 1pp, which involves maintaining a flexible exchange rate
regime without requiring a specific level. The document also notes that the
NBU might allow for short-term deviations of consumer inflation beyond the
mentioned range in order “to avoid losses in economic development." The
development of crediting will be a special focus of monetary policy, according
to the document. The predictability of inflation, combined with comprehensive
monetary policy, will be the basis for the development of the financial system
and the accumulation of short-term and long-term resources available for
lending. NBU Governor Kyrylo Shevchenko emphasized that “the National Bank has set ambitious objectives of not only maintaining a moderate pace of price growth, but also of reviving lending ... for the development of the real sector of the economy.”
4.2.1​ CPI dynamics
Ukraine’s consumer inflation accelerated to 2.5% y/y in August from 2.4% y/y in prior month, ​the State Statistics Service reported on September 9. Consumer prices dropped 0.2% m/m in August (vs. a 0.6% m/m decline in July), driven by price declines for food, and clothing and footwear.
Food prices slid 1.5% m/m in August (after declining 1.4% m/m in July). In particular, prices declined for vegetables (-13.5% m/m), fruits (-8.4% m/m),
22​ UKRAINE Country Report​ October 2020 ​ ​www.intellinews.com