Increase of 15% in mobile tariffs in Jan–Feb adds 0.25 pp to annual inflation – Ukraine's National Bank

The contribution of a 15% increase in mobile communication tariffs in January–February of this year, one of the causes of which was the energy deficit, to annual inflation amounted to 0.25 percentage points, National Bank of Ukraine (NBU) Deputy Governor Volodymyr Lepushynsky said in an interview with Interfax-Ukraine.

According to him, this is an example of how the energy deficit in January–February, through the pass-through of higher business costs, partially affected inflation.

"We do not expect the impact to be significant going forward, as energy deficits affect inflation in different directions. On the one hand, they increase business costs; on the other, they reduce consumer demand," the deputy head of the central bank said.

Commenting on the spike in producer prices in February by 22.3%, according to the State Statistics Service, Lepushynsky also attributed it to higher electricity costs amid significant energy shortages in January–February.

"However, this spike is not a game changer. It is a classic example of a supply shock. We expect that part of the costs will be absorbed by producers themselves, while part will be passed on to price tags; this process is already underway. The NBU pointed to this risk and incorporated it into its January macroeconomic forecast," he said.

According to him, the energy deficit in January turned out to be somewhat lower than the National Bank had assumed, but a very unfavorable combination emerged: significant damage to the energy sector and record-low temperatures in recent years. The greatest impact was felt in energy-intensive industries – metallurgy, chemicals, and machine-building – especially in frontline regions and Kyiv.

"However, from mid-February, as expected, the situation in the energy sector has been improving thanks to additional generation from renewable sources (solar, wind) and warmer weather. In March, the business activity expectations index finally moved into positive territory, which is good news. Even in industry, it is now in positive territory," Lepushynsky said.

He recalled that, according to the State Statistics Service, annual inflation rose to 7.6% in February from 7.4%.

"We currently estimate that, based on March results, it will remain at roughly the same level, whereas our forecast envisaged a decline to 7%," the NBU deputy governor said.

As for the impact of energy deficits on the foreign exchange market, Lepushynsky said it was moderate: production, and consequently exports, of metallurgical, mining, and chemical products declined, while imports of energy resources rose to 1.2 GW in January and a record 1.9 GW in February.

"However, the situation stabilized in March. Meanwhile, higher-than-expected gas reserves in our storage facilities (5.1 billion cubic meters) reduce the need for gas imports going forward," he said.

As reported, at the end of January the NBU downgraded its inflation forecast for Ukraine in 2026 to 7.5% from 6.6% in its October inflation report, and for 2027 to 6% from 5%.

Inflation in Ukraine declined to 8% in 2025 from 12% a year earlier. In 2023, it dropped to 5.1% after surging to 26.6% the previous year.