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

Ukraine’s annual consumer inflation rate accelerated to 7.7%, while core inflation held at 8.1%, showing the war in the Middle East, devastating Russian ballistic strikes, and the halt of the Black Sea corridor – also caused by Russian strikes on vessels – are making the pace of price increases stickier and more persistent. Monthly inflation shows uneven dynamics again: consumer inflation rose to 0.3% in July, while core inflation, which excludes volatile components, decelerated to 0.3% in July.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. But annual data shows core inflation held steady this month and refused to back down, while consumer inflation began accelerating slightly. Volodymyr Lepushynskyi, deputy governor of the National Bank of Ukraine (NBU), previously said preliminary July data pointed to a reversal of the inflation trend, and warned there is a risk inflation stays stuck above the NBU’s 5% target for an extended period. The latest report was published by the State Statistics Service on Monday. Logistics costs have kept accelerating substantially for a third consecutive month, following the spike caused by the war in the Middle East. Fuel prices rose 28% year-over-year in July – only a slight sign of deceleration from June’s 33% increase. Transportation services, meanwhile, rose 28.9% annually, up from 23.1% in June, an even stronger acceleration. Road passenger transport prices rose 6% month-over-month for a second consecutive month, bringing teh annual rate to 30.8%, while railway passenger transport rose 2.8% on the month and 15.5% annually. Other Topics of Interest Air Defense Gaps Directly Worsen Ukraine's Economic Outlook, Analyst Warns Gaps in Ukraine's air defenses translate directly into worse economic outcomes, analyst Oleksandra Betliy says, as the civilian economy and the war effort move as a single system rather than two separate tracks. The reversal was driven less by food, which continued to soften, and more by state-regulated tariffs and transport services, both of which accelerated sharply from June’s pace. Water supply led all monthly price increases in July, surging 31.9% from June, followed by sewerage at 29.8% — both continuing the sharp tariff revisions that began the month before. Road passenger transport came third, ahead of transport services overall, and garbage collection, which rose 5.1%. How have inflation trends for non-food categories changed since June? Utilities saw the steepest acceleration. Water supply tariffs more than doubled June’s already sharp 15.3% rise, while sewerage tariffs accelerated from 14.6% the month before. Together, they pushed housing, water and energy costs up 1.6% on the month, compared with June’s 0.9% increase. Garbage collection fees rose a further 5.1% in July, up from 3.0% in June, for a 16.2% annual increase. Electricity, natural gas, and hot water and heating tariffs stayed flat, as they have all year. Alcohol and tobacco products rose 1.5% in July compared with June, edging up from a 1.4% gain the month before, and are now up 16.2% year-on-year — unchanged from June’s annual rate. The two categories diverged sharply. Tobacco products drove most of the increase, rising 1.8% on the month and accelerating to 23.6% year-on-year, up from June’s already elevated pace. Alcoholic beverages rose more modestly, up 1.1% in July, and remain far less inflated on an annual basis, at 6.5%. Household goods and appliances rose 0.3% in July, unchanged from June, with furniture up 0.9% and appliances up 0.3%. Healthcare costs rose 0.6%, up from June’s 0.3%, driven by pharmaceutical prices turning positive after months of decline, according to the State Statistics Service. Communication prices edged up 0.3%, similar to June’s pace. Recreation and culture rose 0.7%, slightly ahead of June, led by 0.9% month-over-month increase in audio and photo equipment prices. Education inched up 0.1%, easing from June’s 0.3%. Restaurants and hotels rose 0.8%, matching June’s rate. Miscellaneous goods and services gained 0.9%, unchanged from June. How have inflation trends for food categories changed since June? Food and non-alcoholic beverage prices fell 0.2% in July compared with June, while the annual rate accelerated to 6.5% from 5.6% the month before. The dairy and egg segment continued to soften, down 0.2% on the month. Eggs remained the sharpest mover, falling 6.0% in July, and now down 25.4% year-on-year. Milk and cheese moved the other way, rising 0.7% and 0.9% respectively. Vegetables extended their slide, dropping 5.9% in July against a 3.7% decline in June – a seasonal deceleration tied to the new harvest. Fruit swung sharply in the opposite direction, jumping 1.5% in July, though it remains 9.5% cheaper than a year ago. Oils and fats rose 0.5% on the month, down from June’s 0.7% gain, with sunflower oil up 1.2% and other edible animal fats down 0.6%. Butter held flat in June. Bread and bread products rose 0.1%, while fish and fish products climbed 1.3%, similar to June’s pace, and remain up 22.4% year-on-year — the food category’s fastest annual increase. Meat and meat products fell 0.6% in July after being unchanged the month before. Sugar rose 0.6% after a 0.8% decline in June. Non-alcoholic beverages accelerated to a 1.1% monthly gain, lifting their annual rate to 9.8%. Olena Hrazhdan is the Business Reporter at Kyiv Post, covering Ukraine’s markets, business, and economic policy. While she reports broadly on economic issues, her core focus is banking, finance, monetary and fiscal policy. Olena previously wrote for leading Ukrainian business media and became a Fellow of the International Monetary Fund’s Journalism Fellowship in 2024.