How food prices will change by the end of 2025: forecast from the National Bank of Ukraine.

In the second half of 2024, prices rose significantly, with inflation rates exceeding the expectations of the National Bank of Ukraine. This is mentioned in the inflation report by the NBU.

The main reasons for this were:

• limited food supply;
• increased government spending;
• rapid wage growth;
• deepening energy crisis.

The unusually hot and dry summer had a significant impact on agriculture. Reduced yields, deteriorating quality of fruits and vegetables, and the depletion of last year's reserves led to a sharp increase in product prices. The rise in raw material costs, particularly for grain crops, slowed the decrease in cereal prices but accelerated the increase in flour prices.

The lack of feed due to drought conditions also negatively affected livestock farming, contributing to rising prices for dairy products and certain types of meat.

Analysis of current trends in Ukraine's food market shows a steady increase in prices for a number of products, including meat, dairy products, and confectionery. The main factors contributing to the sharp rise in prices for finished goods were significant increases in raw material costs and their scarcity in the market.

Over the past few months, the cost of processed food has increased by 8.9% year-on-year, which significantly exceeded the National Bank of Ukraine's forecast of 5.9% in June 2024.

Although the price of oil initially decreased, the subsequent rise in prices for oilseeds led to accelerated inflation in this segment. Prolonged increases in meat prices also have a significant impact on the overall rise in food prices. Growing volumes of food exports add pressure to the domestic market and prices.

These factors have significantly affected production costs in the food industry, particularly in the dairy and milling sectors. The increase in production costs has led to a rise in wholesale prices, which is likely to soon reflect on the final cost to consumers.

Experts expect that inflation in the food market will remain high in the near future. In particular, price increases for meat, dairy products, and flour products are likely. An improvement in the inflation situation is projected for spring 2025, when the new harvest will arrive, which should slow down the price growth for raw products. It is estimated that by the end of 2025, inflation for these goods may decrease to approximately 6%.

Furthermore, further declines in inflation are expected due to increased production, improved logistics, and falling global food prices. Under such conditions, by 2026, the level of food inflation could drop to 3%.

We also discussed 5 products that will rise the most in price by the New Year. Experts predict an increase in the cost of vegetables, dairy products, alcohol, and several other groups of products.