Raising the minimum wage will fuel inflation in Ukraine

Consumer inflation in Ukraine in 2017 and 2018 will continue to decline, but more moderate rate than last year. This was reported in the inflation report National Bank of Ukraine (NBU).

The regulator has revised the inflation forecast for 2017, from 8% to 9.1%. The forecast for 2018 is not changed and amounts to 6%.

“The need to revise the inflation forecast for 2017 is primarily due to the effects of doubling the minimum wage. However, in 2018, inflation will return to the Central value of the target range,” – noted in the NBU.

At the same time, Natsbanke expect that the weighted monetary and fiscal policy in the medium term will lead to the stabilization of core inflation at around 5%.

Recall that consumer inflation slowed rapidly in 2016, up by 12.4% (from 43.3% in 2015), in line with forecasts of the National Bank. Thus, the national Bank reached its inflation target defined by the monetary policy Strategy for 2016-2020.