The rate of inflation in Ukraine accelerated significantly during the war. At the same time, hyperinflation should not be expected, since the state will control prices in any case.
This is evidenced by the inflation review (June 2022) of the Ministry of Economy.
As noted in the review, the acceleration of inflation in Ukraine was caused by a supply shock in the force majeure conditions of the war (most evident in the increase in prices on the food and fuel markets), which, in combination with pressure from world prices for energy and food, as well as a high level production costs have little negative impact on prices in general.
"However, given the scale of human and economic losses that Ukraine suffered during the war, the rate of growth of consumer prices remains "restrained" for the time being - for the first half of this year, they are 17.4%," the review says.
As noted in the ministry, "prospects for the development of price processes in the market, as during the previous months of the war, depend exclusively on the course of events on the battlefield." But even with such uncertainty in the coming months, it is worth counting on the government's confident actions to regulate the market, the strength of reserves (primarily food and fuel) and the availability of financial assistance from external partners. At the same time, a significant risk of accelerating inflation remains the threat of increased devaluation of the hryvnia, the exchange rate of which is significantly the deficit of foreign currency due to the deterioration of the trade balance due to the blockade of the ports, the outflow of currency due to the stay of a large part of the population outside the country, according to the Ministry of Economy.
"However, we should not expect extremes in price dynamics, which could lead to extremely high hyperinflationary rates with a long-term negative perspective. A state in a state of war will in any case control price processes in the consumer market," the review says.
We will remind you that the NBU predicts that in 2022 inflation in Ukraine will increase