National Bank of Ukraine's Inflation Outlook
The National Bank of Ukraine (NBU) has updated its inflation forecast, raising the expected rate to 12.5% for 2026. However, inflation is projected to ease to 7.3% in 2027 and return to the target level of 5% by 2028. This upward revision reflects ongoing inflationary pressures driven by the consequences of Russian missile strikes, rising fuel prices, and expanded fiscal stimulus measures. Looking ahead, a decline in inflation next year is anticipated due to falling global oil prices, the fading impact of fuel cost increases, and monetary policy interventions.
As of September 2026, the annual inflation rate stood at 10%, with core inflation at 8.8%. Nonetheless, inflation could climb by an additional 0.7 percentage points due to the lingering effects of Russian attacks. Key factors behind the price hikes include:
- damage to businesses and logistics infrastructure;
- rising fuel costs.
Domestic demand and the labor market may weaken as a result of these attacks, further influencing inflation dynamics.
Inflation Risks and Future Prospects
The NBU expects inflation to return to its 5% target by 2028, supported by reduced production cost pressures and increased supply of goods and services within the country. However, risks remain from potential increases in production expenses, shrinking availability of goods and services, and possible disruptions or reductions in international financial aid. Additionally, the ongoing conflict in the Middle East poses a threat of renewed spikes in global oil prices.
According to the International Monetary Fund, Ukraine's total financing gap could reach $54 billion by 2029, with the largest shortfall expected in 2027, ranging between $30 billion and $35 billion. Additional financing needs are projected at around $17 billion in 2028 and $2 billion in 2029. The country's fiscal situation remains challenging due to delays in some planned international funding, prompting the government to prioritize budget spending on critical expenses.
Andriy Pyshnyi emphasized that the central bank "will continue to support the attractiveness of hryvnia-denominated assets and maintain currency market stability to help contain price pressures."
The NBU's inflation forecast reflects Ukraine's complex economic environment, heavily influenced by external factors such as the ongoing war and volatile global market prices. Ensuring internal stability and securing international financial support remain vital. Therefore, coordinated efforts by the government and the central bank will be essential to mitigate inflation risks and foster economic recovery.