In autumn 2025, it seemed the worst was behind: inflation had been slowing for eight consecutive months, falling from a peak of 15.9% in May to 8% in December. But in January the movement stopped, in February it reversed, and March showed 7.9% on an annual basis and +1.7% in just one month.
What became more expensive and why this is no coincidence
The State Statistics Service identifies three leaders in March's price increases: fuel, clothing and footwear, and transportation. Each of these items has a structural explanation. Fuel responds to the annual increase in excise tax burden — this is planned, not situational growth. Clothing and footwear traditionally become more expensive with the start of the new season. Transportation is a derivative of fuel costs and tariff decisions by local authorities.
Core inflation — an indicator that filters out seasonal and administrative spikes — also accelerated: 7.1% year-on-year and 1.5% per month. This means that price pressure is not explained solely by the calendar or official decisions — it is built into the structure of business costs.
"The acceleration of inflation was largely due to residual effects of poorer harvests last year and further increases in prices of excise products... as well as sustained consumer demand".
NBU comment on inflation in March 2025
The NBU knew — and warned in advance
In its January 2026 Inflation Report, the National Bank of Ukraine directly incorporated into its forecast a technical assumption about electricity price increases for household consumers and gradual correction of housing and communal services tariffs, which are currently under a moratorium. An additional pro-inflationary factor is the planned annual increase in fuel excise taxes, which through production costs will put pressure on commodity and transportation service prices.
The NBU's key policy rate remains at 15%. The regulator signaled: a reduction is possible only if inflation slows to close to the forecast trajectory and there are no significant negative changes in the distribution of risks. So far, neither condition is being met.
Numbers that provide context
- 15.9% — peak annual inflation, May 2025
- 8.0% — December 2025, the lowest point after the peak
- 7.6% → 7.9% — February–March 2026: two consecutive months of acceleration
- 6.6% — NBU's minimum forecast for inflation in 2026 (updated forecast, revised upward from the previous 5%)
Notably, the NBU has already abandoned its target of returning to the goal of 5% in 2026 — the new lower bound of the forecast is 6.6%. This is not a technical adjustment: it is an acknowledgment that structural factors — energy, excise taxes, labor costs — will not disappear with the end of hostilities.
If the moratorium on raising housing and communal services tariffs is lifted in 2026 and fuel excise taxes increase as planned — will the NBU be able to keep inflation below 10% without a new increase in the key policy rate?
