Falling inflation in Ukraine: analysis of March data

In March 2024, consumer inflation in Ukraine fell to 3.2% in annual terms, down from 4.3% in February. These figures, released by the National Bank of Ukraine, are based on data from the State Statistics Service. This significant decline in inflation was lower than the NBU's forecast of 5.0% per annum.

The NBU notes that the deviation from the forecast was due to changes in raw material prices. The sharp decline in the price of some products is mainly due to temporary factors that are likely to have an impact in the second half of 2024.

These factors include last year's bumper harvest, this year's mild winter, and the effects of the transportation blockade of the western borders. Export restrictions have led to an increase in the supply of certain food products on the domestic market, which has led to a decrease in their prices.

The growth in fuel prices was slower than expected, both due to the moderate growth in global oil prices and the warm winter.

Nevertheless, the slowdown in core inflation was restrained by the blockade on the western borders, in particular by higher prices for imported goods and higher labor costs for businesses. This reflects the difficult economic situation in the country and requires close monitoring and analysis by the relevant authorities.