The National Bank of Ukraine (NBU) has revised its inflation forecast, projecting 9.7% in 2025 and 6.6% in 2026, with a return to the 5% target only expected in 2027. The increase is attributed to rising price pressures, the ongoing war, poor harvests, and the weakening of the hryvnia against the euro. The central bank’s decision reflects the growing economic challenges faced by Ukraine, which has been under strain due to its conflict with Russia since 2014. Inflationary pressures have been exacerbated by disrupted supply chains, reduced agricultural output, and a weakening currency, all of which contribute to higher consumer prices.
Analysts have noted that the NBU’s updated forecast signals a continued difficult economic environment, with the central bank likely to maintain its accommodative monetary policy to support the economy. However, the prolonged inflationary period may necessitate tighter monetary control in the future, particularly as the hryvnia’s depreciation against the euro continues to impact import costs and domestic price levels. The inflation forecast also has implications for the country’s financial stability, as persistent price increases could erode purchasing power and strain household budgets, particularly in a context of ongoing humanitarian and economic challenges.
The NBU’s latest outlook underscores the broader economic implications of the war, highlighting the complex interplay between external shocks and domestic economic factors. With the hryvnia remaining volatile and the agricultural sector facing long-term disruptions, policymakers face the challenge of balancing inflation control with the need to sustain economic activity. The central bank’s revised projections will likely influence future policy decisions, including potential adjustments to interest rates, and will be closely monitored by both domestic and international observers as Ukraine navigates its economic recovery in the post-war era.