The NBU warned about the risk of an inflationary wage-price spiral in Ukraine

The National Bank of Ukraine has warned about the growing risk of the so-called "salary-price" inflationary spiral. This is a situation where businesses pass on rising costs to customers through higher prices, and workers demand higher wages in response to compensate for the higher prices of goods and services. As a result, inflation spins up further and becomes more difficult to control.

According to one of the panelists, delaying the tightening of monetary policy may increase the risk of starting such a spiral. This will make it difficult for inflation to return to the target level, even after the impact of expensive energy resources and other temporary factors subsides.

What drives the prices

According to the regulator, pressure on prices is simultaneously strengthened by several factors:

• fuel price increase;
• shortage of personnel in the labor market;
• higher business costs for logistics;
• destruction of commodity stocks due to Russian attacks.

The consequences are already visible in the structure of the consumer basket: the share of goods and services whose prices increase by more than 10% for the year increased from 42% in August to 48% in September.

We will remind you that on October 29, the National Bank of Ukraine increased the discount rate from 16% to 16.5% due to increased price pressure and worsening inflationary expectations of the population and businesses. At the same time, the regulator worsened the inflation forecast for the end of 2026 - to 12.5%. Inflation is expected to slow to 7.3% in 2027, with a return to the 5% target expected in 2028. You can follow the future decisions regarding the rate in economic calendar Financier.