NBU revises downwards inflation forecast for Ukraine in 2020 to 6%
The National Bank of Ukraine (NBU) has revised downwards its inflation forecast for Ukraine in 2020 from 4.8% to 6% and confirmed it at 5% for 2021-2022.
"In 2020, inflation will remain within the target range of 5% +/- 1 pp. This will not be impeded by monetary and fiscal support to the economy," the NBU said in a statement on Thursday.
The regulator said that fiscal and monetary policy measures that are aimed to support businesses and households will partially offset the decline in consumer demand. However, consumer demand will remain subdued for long after the quarantine ends, keeping inflation from growing above the target level this year.
Inflation will also be contained by declining global energy prices, which will continue to influence domestic fuel prices. At the same time, the increase in inflation compared with the current level will be primarily driven by a pass through from the recent depreciation of the hryvnia, the NBU said.
"In Q1 2021, inflation will temporarily deviate from the target range against a low comparison base. Afterwards, it will decrease and stabilize at the medium-term target of 5%. This level will be achieved thanks to the NBU's prudent monetary policy and a more restrained fiscal policy after the pandemic ends and economic activity recovers," the central bank said.
The NBU recalled that in March, consumer inflation declined to 2.3% year-over-year. According to preliminary data from NBU online monitoring, inflation will remain low in April.