Ukraine’s annual inflation climbed to 11.0% in October, up from 10.0% in September, according to the State Statistics Service. The monthly increase of 1.8% was double the 0.9% rise recorded in October 2025, pushing the annual rate higher despite a slight easing from September’s 2.1%. Core inflation, which strips out volatile prices, slowed to 1.4% month on month but still rose to 9.7% year on year. Prices have now increased by 10.3% since December, placing the current rate a full point above the National Bank of Ukraine’s previous forecast.
Fuel and Transport Costs Drive the Spike
Fuel and lubricants account for most of the price pressure, rising 5.3% in the month and 53.9% compared to a year earlier. Transport prices jumped 2.6% month on month, with road passenger fares up 43.7% annually. The central bank attributes these spikes to war-related disruptions in the Middle East and Russian strikes on warehouses and logistics, which it estimates will add about 0.7 percentage points to annual inflation. Food and soft drinks also contributed, rising 2.0% monthly and 9.3% yearly, though eggs fell 4.6% in the period. Vegetables saw a sharp 10.2% monthly jump, while bread and bakery products were 21.3% dearer than a year ago.
Utilities rose 1.3% in October, driven almost entirely by water and sewerage tariffs that increased by 10.1% and 8.8%, roughly doubling on the year. Electricity, gas, and heating tariffs remained unchanged. The NBU has raised its key rate by half a point to 16.5%, effective October 30, and lifted its 2026 inflation forecast to 12.5%. This new projection assumes monthly price pressures continue at similar levels through November and December.
Policy Response and Economic Outlook
The central bank expects inflation to ease to 7.3% in 2027 and return to its 5% target in 2028. It plans to hold the 16.5% interest rate until at least the second quarter of 2027, tightening monetary policy even as the economy faces contraction. The NBU now expects the economy to shrink 0.4% this year, citing damage to factories, power, and transport infrastructure from Russia’s campaign. Governor Andriy Pyshnyy stated on November 4 that he would not quit under political pressure. Inflation had previously spiked to 26.6% in 2022 before falling to 5.1% in 2023, rising to 12% in 2024, and ending 2025 at 8%.
