Page 33 - UKRRptOct23

schedule reveals this significant deceleration in inflation, with August's figures reflecting a rate of approximately 10%.
This decline follows a July where consumer inflation had already started to ease, recording at 11.3%. The slowdown can be attributed to factors such as the expanded availability of food products and improved expectations, all while maintaining stability in the exchange rate.
The National Bank of Ukraine (NBU) has also noted a similar trend in August, with inflation experiencing a slowdown. A key contributor to this trend is the increased supply of freshly harvested vegetables and fruits. The augmented availability of these essential commodities has had a cascading effect on food prices, dampening cost pressures and optimizing production and logistics chains.
Furthermore, the reduction in fundamental inflationary pressures aligns with the NBU's expectations. This development bodes well for the country's economic stability, offering a reprieve from the persistent inflationary challenges of recent times.
4.2.1 CPI dynamics
Ukraine observes falling inflation for the second month in a row, and the economic expectations of investors and the government are improving.Consumer prices in Ukraine decreased by 1.4% in August 2023, which led inflation in Ukraine in annual terms to fall to 8.6%, the State Statistics Service reported. In July, inflation was 11.3%, and in June it was 12.8%. According to an updated forecast from investment company Dragon Capital, by the end of the year, Ukraine's GDP growth will reach 4.5%, the hryvnia exchange rate will not change significantly, and inflation will slow to 9%. Meanwhile, the Ministry of Economy believes the inflation rate will continue to slow down in the coming years. "The Ministry of Economy expects GDP growth in 2023 to be closer to 4%. This is a more optimistic forecast than the NBU, which expects growth at 2.9% of GDP," said Economy Minister Yulia Svyridenko at the Yalta European Strategy Forum. Also, according to her, consumer inflation will slow down to 10.6% this year, and the unemployment rate will decrease to 19%. The Ukrainian capital's economy should grow by 0.5-1% this year.
Analysts comment on the price trends in the Ukrainian consumer market.Prices for food products and non-alcoholic beverages in August 2023 decreased by 3.7% compared to July, the Center for Economic Strategy reported. Vegetables and fruits fell in price the most (by 4.2%), as well as clothes and shoes (by 2.3%). Prices for some categories of goods and services increased: transport by 3%, fuel and lubricants by 7.4%. In August 2023, the growth rate of consumer prices slowed to 8.6% in annual terms and in monthly terms by 1.4%. In general, inflation is slowing faster than the National Bank predicted. At the same time, the risk of inflationary pressure remains high because of the war. However, as Deputy Minister of Agricultural Policy Taras Vysotsky noted, there will be no rapid increase in product prices as in 2022. Prices will not soar because products previously grown mainly in the Zaporizhzhia and Kherson regions are now grown on a large scale in other areas. However, seasonal fluctuations will be higher than the statistical average due to storage and logistics difficulties.
33 UKRAINE Country Report October 2023 www.intellinews.com