Inflation in Ukraine: causes and dynamics

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

Inflation is a process of depreciation of money, in which, over time, fewer goods and services can be purchased for the same amount. Almost always, this process is perceived painfully and negatively. In most cases, inflation is characterized by an increase in prices for food, medicines, goods, services, real estate. In other cases, its main manifestation is a decrease in the quality of products and services or the appearance of their deficit.

In Ukraine, the problem of rising prices for consumer goods and services is very acute. The value of the inflation index in Ukraine is higher than in Russia.

What is happening with the Ukrainian economy?

Ukraine's economy is now going through hard times. The redistribution of property, the outflow of capital, the general chaos in the country and the deterioration of economic ties with Russia have become a real test for the population. The actual separation from the rest of the territory of Donbass cutproduction capacity, and the secession of the Crimea has reduced the total tourism potential. The country is catastrophically short of fuel resources, the extraction of which was carried out mainly in the Donbass. Now in Ukraine they are trying to develop renewable energy, increasing cooperation with other countries, but it will take time for the economic return from it to appear.

One of the main sources of income has become agricultural production, which is very sensitive to weather conditions, which makes the Ukrainian economy unreliable and risky. In addition, she is now increasingly dependent on external factors.

The situation in the economy and the standard of living of Ukrainians deteriorated sharply in 2014-2016, and then stabilized at a low level, which also affected inflation. But high risks of crop failure could negate this momentum. It is easy to see that the period of economic failure in Ukraine and Russia, as well as the period of its stabilization, coincide in time. But the causes of the crisis of the two countries are completely different.

Price situation in Ukraine

Information on inflation in Ukraine is provided by the State Statistics Service (Derzhkomstat). To determine its value, data on prices for consumed goods and services were used.

Price tags in Ukraine are growing in the same way as in Russia. So, in the early 90s, there was hyperinflation in the country. A particularly large jump in prices occurred in 1993, when they rose by 10,155% at once. Quite quickly, the rate of inflation decreased, and in 1997 it was only 10%. Then her level is slightlygrew and peaked in 2000 (25.8%).

Further, until 2014, price growth was from almost zero to average. The maximum was observed in 2008 (22.3%), and the minimum - in 2002 (-0.57%). In recent years, inflation has increased, reaching a maximum in 2015 (43.3%). In 2016 and 2017, the inflation rate was about 13%, and for the last 12 months - 8%. This indicates a decrease in its pace.

In July 2018, prices increased by 0.7%. Thus, inflation in Ukraine, just like in Russia, began to slow down. As for the comparison of specific figures, the Rosstat data give lower values for inflation in Russia than the presented data for Ukraine. However, all this does not take into account hidden inflation, so a correct comparison of its total value can only be made by professionals who are familiar with the situation in both countries.

Total and average inflation in Ukraine

From 1992 to 2018, total inflation was 58,140,545.6%. The average annual inflation rate in Ukraine over the past 10 years was 13.42%.

Conclusion

Inflation in Ukraine is quite high and is a serious problem for the population. The country's economy has become more vulnerable and dependent on external factors in recent years, which creates the risk of a sharp rise in prices in subsequent years. Since 2016, prices in Ukraine have stabilized slightly, while inflation in Russia is now significantly lower.