Ukraine Inflation Picks Back Up to 7.7% as Core Prices Refuse to Budge

Ukraine's annual inflation rate climbed to 7.7%, with core inflation remaining at 8.1%, as conflict in the Middle East and Russian strikes in the Black Sea caused price increases to remain high and persistent. Monthly inflation fluctuated, with consumer inflation increasing to 0.3% in July, while core inflation slowed to the same level.

Despite this, annual data showed core inflation staying strong and refusing to drop. Volodymyr Lepushynskyi, deputy governor of the National Bank of Ukraine, had previously warned that the inflation trend might not reverse and that inflation could stay above the 5% target for a long time. Logistics costs continued to rise for the third month in a row, following the war in the Middle East.

Fuel prices surged 28% year-over-year in July, while transportation services saw a 28.9% annual increase, the strongest jump since June. Road passenger transport prices rose 6% monthly, pushing the annual rate to 30.8%, while railway passenger transport grew 2.8% monthly and 15.5% annually. Water supply tariffs surged 31.9% from June, followed by sewerage at 29.8%, both driven by tariff revisions.

Utilities saw the steepest acceleration, with water supply tariffs doubling June's rise and sewerage tariffs accelerating. Housing, water, and energy costs rose 1.6% monthly, compared to June's 0.9% increase. Garbage collection fees increased 5.1% in July, up from 3.0% in June, resulting in a 16.2% annual rise. Electricity, natural gas, and hot water and heating tariffs remained flat.

Alcohol and tobacco prices rose 1.5% in July, up from 1.4% in June, totaling a 16.2% year-on-year increase. Food prices fell 0.2%, while non-food prices accelerated, with household goods up 0.3%, healthcare up 0.6%, communication up 0.3%, recreation and culture up 0.7%, and miscellaneous goods and services up 0.9%. Food prices dipped in July, while non-food prices surged, with tobacco products driving most of the increase.