In February 2025, inflation accelerated to 13.4% yoy. In monthly terms, prices increased by 0.8%. This is according to data published by the State Statistics Service of Ukraine.
The dynamics of consumer inflation were close to the trajectory of the NBU’s forecast published in the January 2025 Inflation Report. At the same time, core inflation turned out higher than expected due to continued growth in business costs, in particular the cost of labor.
Raw food prices rose by 13.0%
In February, the growth in prices for raw foods accelerated in annual terms. Prices of fruits, some animal farming products, flour, and cereals increased more rapidly, driven by the lingering effects of last year’s low harvests. Pork, chicken, and sugar prices approached those in Ukraine’s main trading partners amid sustained exports. In the meantime, growth in vegetable prices somewhat slowed thanks to an increase in supply on the back of imports, the arrival of the new harvest of greenhouse produce, and a decrease in demand for some items.
Core inflation rose to 12.0%
In February, the rise in prices of processed foods accelerated, to 16.7% yoy. This trend continued to be driven by an increase in the price of raw food inputs, as well as higher energy, labor, and logistics costs for businesses. As a result, prices of bread and some baked goods, oil, meat, and dairy products grew rapidly. With global prices rising, the prices of certain imported goods, including cheese, tea, coffee, and chocolate, grew as well.
The growth in non-food prices accelerated slightly, to 4.4% yoy. Meanwhile, clothing and footwear prices remained lower than last year.
Services prices also grew slightly faster, at the pace of 14.3% yoy. Compared to January, prices increased for healthcare, transportation, telecommunication, and recreational and cultural services. On the other hand, personal care services and insurance and financial services grew in price more slowly.
Administered prices were up by 18.1%
In February, prices of excisable goods grew faster as a result of further increases in production costs, as well as price adjustments due to the strengthening of measures to combat shadow market supply and the likely impact of the expected test launch of eExcise. The pressure from production costs pushed up prices for pharmaceuticals and healthcare supplies and equipment. Meanwhile, the moratorium on raising certain utility prices for households continued to restrain the growth in administered prices.
Fuel prices grew by 13.9%
In February, fuel price growth accelerated compared to January, primarily due to high growth rates of LPG prices. At the same time, the surplus supply of petrol fuels, competition between filling station chains, and optimization of the logistics of imported supplies restrained the increase in fuel prices.
Inflation will rise in the coming months due to continued effects of last year’s lower harvests and increases in businesses’ production costs, namely the cost of energy and labor.
However, in H2, inflation should return to a deceleration trajectory thanks to the NBU’s monetary policy tightening measures and the gradual fading of the effects of temporary factors. Inflation is expected to decline to single digits at the end of the year and continue to move toward the 5% target over the policy horizon.