The NBU explained why inflation in Ukraine is falling rapidly and what risks can change the trend.

In June, consumer inflation in annual terms slowed to 12.8%. “The slowdown was caused by a greater supply of food and fuel, a decrease in world prices on commodity markets, and an improvement in inflation and exchange rate expectations against the background of a stable situation on the cash currency market,” the NBU explained.

Thus, the increase in processed food prices continued to slow rapidly to 14.7% annually. The growth of prices for most non-food goods slowed to 12.2%, services cost to 14.2%, fuel prices to 20.3%, and raw food products to 18.2%. As the national bank noted, the potential to further lower inflation remains.

At the same time, there are high risks of increasing pro-inflationary pressure. The consequences from the destruction of the Kakhovka HPP have not yet affected inflation but may cause negative effects later. The pressure on consumer prices can also increase pricing in the electricity market for non-household consumers.