Ukraine’s economy is facing challenges with a gradual decline in domestic government bonds and deposits, but the central bank remains calm about inflation. Despite Russian shellings impacting energy infrastructure, the demand for electricity and energy equipment imports is expected to increase without severely affecting inflation.
In May, inflation only rose to 3.3 percent annually, mainly due to a decrease in raw food prices. The National Bank of Ukraine reported that this decline in food prices is the fourth time in 25 years, partly attributed to a surplus of raw products per person resulting from migration.
Favorable weather conditions, reorientation of producers to the domestic market, and steady business expenses are helping to keep inflation low. Electricity imports are estimated to cost $800 million this year, with plans to address electricity deficits and market demands.
While the key rate is set to remain stable until 2024, there is optimism for lower interest rates on business loans in the future. Overall, despite challenges, the central bank is confident in managing inflation and economic stability.