NBU'S inflation forecast for 2019-2020 unchanged
The National Bank of Ukraine (NBU) believes that the forecast of slowing inflation in 2019 to 6.3% from 9.8% in 2018 announced in October 2018 is realistic.
"Inflation will continue to slow down gradually. As before, the NBU expects that it will fall to 6.3% by the end of 2019 and by 5.0% by the end of 2020. In addition, as it is planned earlier, by the beginning 2020, inflation will fall within the target range - 5% +/- 1 percentage point (p.p.)," the central bank reported on its website.
According to the NBU, inflation will slow down thanks to: weighted fiscal policy in terms of substantial payments on the state debt in 2019-2020; a slowdown in wage growth amid a reduction in the gap in their level in comparison with neighboring countries and a decrease in the intensity of migration processes; relatively low volatility of the hryvnia exchange rate and, accordingly, moderate rates of imported inflation; cheaper energy in global markets, as well as a slow rise in prices for raw food products.
"These factors contribute to a slowdown in underlying inflation to 5% in 2019 from 8.7% in 2018, and no more than 4% in 2020-2021," the central bank said.
At the same time, the further increase in administratively regulated prices and tariffs required to bring them to the market level will have an inflationary impact.