Inflation in Ukraine accelerated to 12% in 2024, exceeding forecasts made by the country's National Bank, Ukraine's statistics service Derzhstat announced on Jan. 10.
The Ukrainian economy has undergone harsh conditions with the onset of Russia's full-scale invasion of Ukraine in 2022. Following the start of the invasion, inflation skyrocketed to 26.6% in 2022 from 10.0% in 2021.
As Russia's full-scale invasion continues into its fourth year, inflation has continued to drive up prices for Ukrainians. The accelerated rate surpassed forecasts made by Ukraine's National Bank in November, which estimated that Ukraine would end 2024 at an annualized 9.7% inflation rate.
The main driver for inflation growth in 2024 was the increasing cost of groceries as well as electricity costs.
Food prices grew 1.8% in December, down from a yearly high of 3.9% in November, the Ukrainian state registry Derzhstat reported.
The price of food and drinks increased 14.1% year over year from December 2023, with vegetables increasing 48.3% in price. Amid Russian attacks on energy infrastructure, electricity costs also increased by a massive 63.6% year over year in December, Derzhstat reported.
Ukraine's National Bank predicted in November that the country's annual inflation rate will drop to 6.9% in 2025, and return to the bank's 5% target in 2026.
Russia's invasion caused a major hit to Ukraine's economy, which suffered a 29.1% fall in GDP in 2022. Since then, the country has made strides in stabilizing the situation, and the GDP is expected to grow by over 4% in 2024 and 2025.
Despite the high inflation, Ukraine's economy has managed to adapt to the realities of the full-scale war as Russia's economy faces increasingly unfavorable forecasts. Russia faces surging inflation and a falling ruble that forced the central bank to institute a 21% interest rate, the highest level since the early 2000s.
The Ukrainian government and economy have been propped up by financial support from Western allies, including military and humanitarian aid as well as loans from frozen Russian assets.
Tim Zadorozhnyy
