The National Bank has revised its 2026 inflation forecast upward to 10%. The revision is worth reading closely, because the reasons given tell you more about the year ahead than the number itself does.
What drove the revision
| Driver | Nature |
|---|---|
| Fuel price increases | cost-push, sustained |
| Damaged infrastructure | supply-side, structural |
| Devaluation pressure | imported inflation |
| Wage growth | labour shortage, not demand boom |
| Revised forecast | 10% for 2026 |
| Policy response | rate to 15.5% on July 30 |
Every item on that list except the last is a supply problem. That distinction is the single most useful thing to understand about Ukrainian inflation right now.
Supply-side inflation behaves differently
Classic inflation comes from too much money chasing too few goods, and a central bank fixes it by making money more expensive. What Ukraine has is different: the goods themselves cost more to produce and deliver, because refineries, power plants and logistics have been damaged, and because the people who do the work are scarcer.
Raising the policy rate does not repair a substation. What it does is prevent a second-round effect — where people expect prices to rise, move into foreign currency, weaken the hryvnia, and make imports more expensive, which raises prices again. That loop is what the July hike is aimed at.
Wages are the part most often misread. Wage growth here is not a sign of an overheating economy; it reflects a workforce reduced by mobilisation and emigration. Employers pay more because there are fewer people, not because demand is booming.
The part I'd be careful about
Forecasts in this environment are conditional on things nobody controls. The NBU has already revised this number up once. Another winter of strikes on energy infrastructure would push it further, and the forecast implicitly assumes a heating season that goes better than the last one.
It is also worth noting that different institutions publish different numbers, and they are not interchangeable. The NBU's 10% is its own projection; independent centres have published lower figures for end-year inflation. Anyone comparing yields to inflation should be clear about whose forecast they are using, because the choice changes the answer by several points.
My take
Ten percent inflation with a 15.5% policy rate and 15–16% bond yields is, arithmetically, a workable environment for savers — the return still beats the erosion. That is not a normal state of affairs in a wartime economy, and it exists because policy has deliberately kept rates above expected price growth.
What I would watch is the fuel line specifically. It has been the fastest-rising component, it feeds into everything transported by road, and it is the item most likely to force another upward revision. If fuel stabilises, 10% is achievable. If it does not, this forecast gets revised again, and the comfortable real yield everyone is counting on gets thinner.
Bottom line: the revision is driven by supply, not demand — which is why the rate hike addresses the currency channel rather than prices directly. Watch fuel; it decides whether 10% holds.
This is analysis, not investment advice.