MOSCOW, January 31. /TASS/. Ukraine lost some production capacity in 2024 due to the destruction of energy infrastructure, according to the inflation report of the National Bank.
Some production capacity has been lost, the report said, adding that as a result, business expectations and production activity weakened in a number of industries, especially in energy, mining, and metallurgy.
According to the report, problems in the energy sector caused problems in the Ukrainian economy. A significant factor in the weak economic activity in the second half of 2024 was the shortage of electricity caused by the destruction of energy infrastructure, the National Bank added, noting a significant shortage of electricity in July, November, and December last year.
The National Bank also noted that inflation in Ukraine will continue to grow until at least mid-2025 and a further increase in the key rate is expected at its next meetings.
According to the National Bank, inflation in Ukraine in December 2024 increased by 10.7%, mainly due to higher prices in the service sector (by 12.5%). According to preliminary estimates, inflation continued to grow at a rapid pace in January 2025. Due to the fact that its figure exceeded the double-digit mark, inflation expectations of businesses and the population as a whole worsened, the report noted.
To combat rising prices, the National Bank said that interest rate policy is likely to be strengthened at the next board meetings. In the first months of 2025, inflation is likely to continue to rise due to the influence of both temporary factors, including last year's poor harvest, and fundamental factors, mainly pressure from companies’ production costs, the report said.
The regulator hopes that the upward trend in inflation will be reversed by mid-2025.
On January 23, the National Bank of Ukraine raised its key interest rate for the second time in just over a month - from 13.5% to 14.5% per annum, citing higher-than-expected inflation rates.