The National Bank of Ukraine predicted a rise in inflation in July and downgraded its forecast

The National Bank of Ukraine (NBU) today decided to maintain its key policy rate at the current level of 15.5% annually.

This was announced by NBU Governor Andriy Pyshnyy.

He noted a slowdown in inflation in June—from May’s 15.9% to 14.3%—marking the first such drop in 2025, during which retail prices had consistently risen. However, the NBU admitted that the decrease was worse than expected.

“As expected, inflation peaked in May and declined in June (14.3% year-over-year). At the same time, it remained higher than forecasted, mainly due to adverse weather conditions affecting food supply. There’s still significant underlying price pressure driven by soaring food costs and high business expenses for raw materials and wages,” said Pyshnyy.

He also predicted a rise in inflation in July and revised the 2025 inflation forecast upward from 8.7% to 9.7%.

“Given the greater war-related losses, continued pass-through of rising business costs into prices, a downgrade in crop yield forecasts, and the actual weakening of the hryvnia against the euro, the NBU has revised the inflation trajectory toward a slower decline. It is now projected to decelerate to 9.7% in 2025, 6.6% in 2026, and 5% in 2027,” Pyshnyy stated.

He also downgraded the NBU’s 2025 GDP growth forecast from 3.1% to 2.1%.

This year, Ukraine is expected to receive about $54 billion in international financial assistance, of which around $24 billion has already been received. The largest remaining inflows are expected under the ERA Loans program ($18 billion by year-end) and the Ukraine Facility ($8 billion).

“Future funding volumes may vary depending on Ukraine’s defense and reconstruction needs. The NBU’s baseline macroeconomic forecast assumes $35 billion in international aid in 2026 and $30 billion in 2027. A third of these amounts has already been announced by partners, while negotiations continue for the rest,” Pyshnyy clarified.

He emphasized that “the course of the full-scale war and insufficient international financing” remain the primary risks to Ukraine’s economy.

Among other risks, the NBU head listed:

1. Emergence of additional budgetary needs, primarily for defense.

2. Further infrastructure damage, especially in the energy sector.

3. Worsening negative migration trends and an expanding labor shortage in the domestic job market.

4. A more severe than currently expected impact of weather on this year’s harvests.

5. Less favorable global conditions amid growing geopolitical uncertainty and deglobalization, as well as increased volatility in global commodity and financial markets.

At the same time, Pyshnyy does not rule out keeping the key interest rate at the current 15.5% through the end of 2025.

Earlier, the NBU reported that Ukrainians are increasingly turning to cryptocurrency, reducing the volume of traditional bank transfers.