Inflation slowed due to strengthening of hryvnia - NBU

"Consumer inflation slowed from 9.8% in 2018 to 4.1% in 2019, according to the State Statistics Service. A key factor of a significant slowdown in consumer price growth was the strengthening of the hryvnia exchange rate," the statement said.

The NBU stressed that the strengthening of the national currency was caused by the high interest of investors in hryvnia financial instruments, given their attractive profitability against a backdrop of a long period of macroeconomic stability, as well as the overall growing productivity of the Ukrainian economy.

The reduction in inflationary pressure was also supported by a general decrease in world prices for energy resources that Ukraine imports and a decrease in pressure from the food supply. At the same time, inflationary expectations of the population, financial analysts, business and banks gradually were improving.

Together, these factors outweighed the impact of faster-than-expected growth in consumer demand and wages. The slowdown in inflation proved to be more significant than projected in the NBU's forecasts, which were published in inflation reports during 2019 (6.3% at year-end), as well as in the estimates of other expert organizations.

Core inflation in 2019 slowed to 3.9% from 8.7% in 2018.

The NBU stressed that it would continue to direct its monetary policy in support of the inflation target set at 5% with a permissible range of one percentage point. The low inflation rate, according to the NBU, will create conditions for sustained economic growth, economic de-dollarization and cheaper credit for businesses and individuals.

op