The National Bank of Ukraine has raised its inflation expectations for the end of 2026 to 12.5%, according to the regulator's October Inflation Report, cited by RBC-Ukraine. In the third quarter, consumer price growth accelerated markedly: while inflation stood at 7.2% year-on-year in June, it reached 10% by September, significantly higher than the NBU's July forecast. According to the regulator's estimates, price growth continued in October, and core inflation stood at 8.8% in September. At the same time, the NBU downgraded its assessment of real GDP dynamics from a previously expected growth of 1.8% to a contraction of 0.4%, and according to the regulator's calculations, the consequences of Russian shelling alone will add about 0.7 percentage points to annual inflation.

Fuel: The Main Price Driver

Among the key reasons for revising the forecast, the National Bank cites the rising cost of fuel amid a new surge in global oil prices. Diesel fuel has risen in price the most: global supplies have decreased due to supply disruptions from the Middle East, and reserves in Europe remain low. Additional pressure came from seasonal demand in August-September, when the harvest begins and cargo transportation increases. The NBU warns that rising fuel prices will gradually spill over into the prices of other goods and services, so price pressure will remain significant in the coming months.

Warehouse Destruction Hits Cost of Production

The second major factor was problems with food storage and delivery. According to NBU estimates, as a result of Russian attacks, about a third of warehouse space in Kyiv and the Kyiv region was destroyed within a few months. The loss of distribution centers forced producers to deliver products directly to stores more often, which increased transport, personnel, and supply organization costs. A telling example is eggs: in June-August they became cheaper by 19-26%, and in September they rose in price by 12.2% year-on-year; requirements from retail chains for direct deliveries could have raised the cost of production of eggs by 10-15%.

Services and Housing: Where Prices are Growing Fastest

Among services, education experienced the sharpest price increase: in September, prices in this category grew by 19.6% year-on-year following wage increases in the sector. The growth of housing rent also accelerated—from 10.2% in June to 13.7% in September. The NBU links this, in particular, to the fact that due to Russian attacks, more people are moving internally, and the demand for rental housing has increased in safer regions.

Prospects: Slowdown from 2027 and 5% Target by 2028

According to the regulator's expectations, starting from the first quarter of 2027, inflation will gradually slow down—to 7.3% by the end of the year, and it will only reach the 5% target by the end of 2028. This is expected to be facilitated by the exhaustion of secondary effects from rising fuel prices, slower wage growth, lower global oil prices, and the maintenance of monetary policy measures, including the NBU's decision on the discount rate. At the same time, the negative impact of destruction on economic activity and prices, according to the National Bank, will also be felt in 2027.

What This Means for Your Wallet

Experts see the greatest risks of price increases until the end of the year for eggs, dairy products, bread, and greenhouse vegetables; bread could rise in price by another 10%. A comparison of prices for basic products in ATB, Silpo, Novus, and Auchan chains as of November 5 showed that cheap buckwheat (54.99 UAH/kg on promotion) was found in Silpo, and the most affordable dozen eggs in Novus for 58.99 UAH.