Food inflation close to local peak - NBU forecast

Food inflation in Ukraine is approaching a local peak and will begin to slow down in the near future due to the arrival of a new harvest on the market, a decrease in prices for certain food products and an increase in imports.

"Food inflation is close to a local peak and will continue to decline in the categories of both processed (from July) and raw products (from August) along with the arrival of new harvests on the markets," the inflation report for July 2025 published by the National Bank says.

The regulator explains that seasonal fluctuations in harvests traditionally have a noticeable impact on inflation dynamics throughout the year. If last year's harvest was weak, this year its volumes are sufficient to change the inflationary trend. At the same time, due to the shortage of certain types of products, which has already affected the price level, inflation for raw products is likely to remain in double digits by the end of the year, the report says.

"In particular, the effects of spring frosts mainly affected fruits, the prices of which increased rapidly and will determine a significant contribution to food inflation in 2025. While for vegetables, weather conditions were favorable, so their prices may even decrease by the end of the year," the NBU notes.

The growth in prices for raw products accelerated to 28.7% in annual terms in June, although the National Bank expected it to slow down. This development is associated with the depletion of last year's reserves, which were limited due to poor harvests, as well as the impact of a prolonged cold snap in the second quarter, which delayed the ripening of some crops, reduced their yield and worsened expectations for the volume of harvest in the current season. At the same time, a gradual increase in vegetable and fruit yields is expected in the forecast period, which will help slow down the growth rate of prices for this category of products.

"In addition, the rate of price increases for all types of meat has significantly increased due to rising costs, a decrease in the livestock population (in particular due to outbreaks of ASF), and an increase in external prices against the background of active exports," the National Bank comments.