Ukraine's Inflation Surge in September 2023

KYIV (Reuters) – Ukraine's consumer inflation rose to 8.6% year-on-year in September, driven by rising energy prices, higher business costs, and a lower harvest, according to the statistics service on Thursday.

Inflation was recorded at 7.5% year-on-year in August. The statistics service noted that monthly inflation reached 1.5% in September.

Key contributing factors to the rising inflation include an increase in utilities tariffs and higher electricity prices. The power sector in Ukraine is currently facing a crisis due to intensified Russian bombardments impacting energy infrastructure.

Frequent missile and drone attacks have diminished about half of Ukraine's energy-generating capacity since March, leading to prolonged blackouts nationwide and forcing businesses to depend on pricier electricity from generators.

To address the crisis, the government has also increased retail electricity prices to finance significant repairs in the power sector ahead of the crucial cold months. Electricity prices surged by 63.6% in September year-on-year, according to the statistics service.

Additionally, food prices rose by 8.5% in September compared to the same month last year, attributed to a reduced harvest this year.

Ukraine's central bank projects inflation to be at 8.5% by the end of 2024, declining to 6.6% by the end of 2025.