KYIV, June 5 – Inflation in Ukraine in May 2025, according to the estimates of the National Bank of Ukraine (NBU), probably reached a local maximum and slightly exceeded the forecast trajectory of the regulator, in particular due to seasonal factors and an increase in business production costs.

"In April, inflation accelerated to 15.1% in annual terms. NBU estimates indicate a further increase in annual inflation in May, which slightly exceeded the current forecast trajectory," the regulator said during a press briefing on monetary policy on Thursday.

It is noted that the increase in food prices was influenced by spring frosts, which increased the cost of early vegetables and fruits.

Underlying inflation, after slowing in April, accelerated again in May - against the backdrop of stable demand and rising business spending, in particular on wages, the National Bank added.

"Inflation expectations of economic agents, although they deteriorated somewhat, remained quite stable and significantly lower than the current inflation rate," the NBU noted.

The regulator reported that search query data also indicated a further decline in public interest in the topic of inflation. This was facilitated by the NBU's measures to protect hryvnia savings from depreciation and stabilize the foreign exchange market.

"Inflation will begin to decline in a wide range of goods and services in the summer and will gradually move towards the 5% target," the National Bank said.

The NBU explains that the slowdown in inflation will be facilitated by the arrival of a new harvest, a better situation in the energy sector compared to last year, a decrease in world oil prices, the weakening of external price pressure, and the continued action of the National Bank's monetary policy.

In addition, the high level of the comparison base last year will also have a significant contribution, in particular due to a one-time increase in electricity tariffs in June 2024.

"At the same time, the trajectory of the slowdown in inflation in the coming months will largely depend on the impact of spring frosts and summer weather conditions on the supply and prices of agricultural products," the NBU emphasized.

As reported, the NBU has worsened the inflation forecast for 2025 from 8.4% to 8.7% and maintained its expectation of its return to the target level of 5% in 2026.

The NBU this week, as in mid-April, kept the refinancing rate at 15.5% per annum. (om/ez)