Inflation in Ukraine Slowed to 8.2%, but Prices Continue to Put Pressure on Ukrainians’ Wallets

In May, inflation in Ukraine slowed to 8.2% year-on-year. At first glance, this may look like a positive signal the pace of price growth is lower than in April, when inflation stood at 8.6%. But the May data does not mean that price pressure has disappeared or that Ukrainians will quickly feel relief in stores, transport, or the service sector. On a monthly basis, prices rose by 0.9%. The actual indicators of headline and core inflation exceeded the trajectory of the National Bank’s forecast published in the Inflation Report for April 2026. This means that prices are behaving more rigidly than the regulator expected.

Time for Action looked into why the slowdown in inflation should not be seen as a complete cooling of prices, which goods and services continue to become more expensive, and what this means for the Ukrainian economy until the end of the year. The main feature of the May data is that headline inflation did slow down, but fundamental price pressure remained noticeable. The National Bank explains this by the growth of business costs for wages, energy resources, and logistics. For consumers, this looks simple: it is becoming more expensive for companies to produce, transport, store, and sell goods, so part of these costs is transferred into the final price. That is why the official slowdown in inflation does not cancel out the feeling of high prices. A person may see a lower annual figure in statistics, but at the same time pay more for bread, oil, fish, transport, car repairs, or beauty services. Inflation has become uneven: some goods are becoming more expensive more slowly, some are becoming cheaper, but certain positions continue to strongly push household expenses upward.

Core inflation is especially revealing. In May, it accelerated to 7.9% year-on-year. Core inflation is important because it better shows persistent price pressure, without sharp seasonal fluctuations in individual goods. If this indicator is rising, it means that the problem is not limited to short-term price changes for vegetables or fuel. Deeper drivers of price growth remain in the economy. One of them is processed food products. Their price growth in May accelerated to 10.4% year-on-year. Sunflower oil became more expensive most noticeably. The reasons are a shortage of raw materials and the partial suspension of production at some plants because of the low profitability of processing. For Ukraine, where oil is a basic product in the consumer basket, this is a significant factor. Bread also continued to become more expensive. Its price was pressured by the cost of raw materials, packaging materials, and logistics. Higher fuel prices additionally affect the entire chain from the delivery of flour to the transportation of finished products to stores. As a result, even an essential product becomes more expensive not because of one reason, but because of a combination of costs.

Fish and seafood became more expensive because of higher fuel prices and storage costs. This shows another feature of current inflation: the price of energy resources and fuel affects not only transport, but also products that require cooling, special storage, and regular delivery. At the same time, not all food products became more expensive equally. The annual pace of price growth for raw food products in May slowed significantly to 4.6%. Pork became more expensive more slowly thanks to an increase in the supply of domestic and imported products. Chicken also grew in price more slowly, while eggs became cheaper because of expanded supply on the domestic market. Cucumbers became more expensive more slowly because of increased supply and restrained demand. Apples became cheaper thanks to more active sales of the previous harvest’s remaining stocks. This is the case where seasonal and market factors really helped slow headline inflation.

But even in the food group, problematic positions remain. The NBU recorded a sharp rise in prices for buckwheat and millet. The reasons are limited supply, high processing costs, and stable consumer demand. For Ukrainian buyers, this matters because cereals belong to everyday goods, especially for families that carefully plan their expenses. Separate pressure comes from the service sector. In May, services inflation accelerated to 13.6% year-on-year. This is significantly higher than the headline inflation figure. The main reasons are business costs for fuel, electricity, and wages. Certain transport services, moving services, car maintenance, driving courses, as well as leisure and beauty services became more expensive faster. These categories clearly show how inflation moves from production costs into everyday life. A person may buy certain goods less often, but it is difficult to completely avoid expenses for transport, repairs, training, or basic services. At the same time, price growth for taxis, restaurants, cafés, and fast-food establishments stopped. This may indicate that in some segments, demand is already limiting the ability of businesses to raise prices further. When consumers start saving, companies cannot always transfer all their costs to customers.

Non-food goods showed more stable dynamics in May. Price growth for them remained almost unchanged 0.3% year-on-year. This sharply distinguishes them from food products and services, where price pressure is much stronger. A separate problem is administratively regulated prices. Their growth accelerated to 10.2% year-on-year. One of the reasons was the increase in urban transport fares in a number of regional centers. The main factor is the rise in the cost of fuel. Fuel remains one of the strongest sources of inflationary pressure. In May, annual fuel inflation reached 38.7%. The NBU explains this dynamic primarily by the effect of a low comparison base. But for consumers, what matters is not only the statistical base, but the actual price at the gas station and its impact on other expenses.

On a monthly basis, gasoline continued to become more expensive, while diesel fuel and automotive gas became cheaper. Such different dynamics show that the fuel market remains unstable. And any changes in it quickly affect the cost of transport, delivery, food products, and services. The reasons for inflationary pressure are not limited to the domestic market. At the beginning of the year, prices were affected by winter attacks on Ukraine’s energy system and the spring outbreak of war in the Middle East. This influenced the cost of electricity, oil, and gas. The previous weakening of the hryvnia exchange rate and the increase in enterprises’ wage costs also had an effect. For business, this means a more complicated financial model. Enterprises have to pay more for energy, logistics, fuel, workers, and materials. Some companies may restrain prices so as not to lose customers, but it is difficult to work for a long time with growing costs without revising prices. That is why inflation does not disappear quickly even when some seasonal goods become cheaper.

For the population, the situation is also mixed. The NBU expects that by the end of 2026, the economy will grow by 1.3%, and Ukrainians’ real wages will increase by almost 12%. This is a positive signal, but it does not cancel the risk of further price growth. If wages grow, but food, fuel, and services become expensive quickly, part of this increase is simply absorbed by daily expenses. By the end of 2026, the National Bank expects inflation to accelerate to 9.4%. After that, it is forecast to decline to 6.5% in 2027 and to the target 5% in 2028. That means the regulator does not view the May slowdown as a final turning point. On the contrary, another acceleration is still possible ahead. The May data shows that Ukrainian inflation has become more complex. It is no longer explained by one factor. Prices are simultaneously affected by energy, fuel, logistics, wages, imports, the supply of individual products, and external events. That is why the decline of the headline indicator to 8.2% does not mean that price pressure has disappeared.

Іnflation has slowed in statistics, but it has not retreated in real life. Ukrainians may see some relief in certain products, including eggs, apples, chicken, or pork, but at the same time pay more for bread, oil, fish, services, transport, and fuel. For the economy, this is a signal that the fight against inflation is not over yet. For consumers, it is a reminder that even a lower annual figure does not guarantee a quick reduction in expenses. For the NBU, it is a reason to carefully take into account business costs, the fuel factor, and the situation in the energy sector when making the next monetary policy decisions.