Ukrainians are urged to tighten their belts for the next six months as nearly everything is set to become more expensive.

For several months now, Ukrainians have been witnessing the relentless rise in prices of most food products and grocery items on store shelves.

According to the State Statistics Service, the annual inflation rate in Ukraine in 2024 reached 12 percent. Specifically, food prices increased by 14% over the year, which has significantly impacted citizens' wallets, as reported by UNIAN.

Last year, the most significant price increases were observed in vegetables—over 48 percent, butter—nearly 34 percent, and sunflower oil—about 21 percent. Milk prices rose by almost 19%, bread by over 18%, fruits by more than 16%, and cheese by more than 16 percent. Prices for eggs, which Ukrainians recently jokingly referred to as "golden" due to their rapid price hike, increased by more than 13%. The prices of alcoholic beverages and tobacco products also rose. As for fish and fish products, this category saw a 13 percent increase.

Utility services increased by nearly 19 percent, primarily due to a significant rise in electricity tariffs for households in June, from 2.64 UAH to 4.32 UAH per kWh. The cost of medical services grew by over 13%, while transportation costs increased by just over 7 percent. Additionally, educational services became more expensive by 12%, and restaurant and hotel services rose by more than 13 percent. Communication services also hit the pockets of consumers, with prices climbing by more than 9%.

The negative trend from last year continued into January: experts report daily increases in prices for cucumbers, beets, cabbage, buckwheat, and several other popular products. Furthermore, Ukrainians have to spend more on communication services, as all Ukrainian mobile operators raised their service prices at the beginning of the year.

Most experts agree that one of the main reasons for the rise in food prices is the poor harvest from last year due to abnormal heat and drought.

"This led to a significantly lower yield—specifically, 30% less potatoes. This undoubtedly affected the overall supply in the market, provoking price increases," notes Pendzin.

However, it is also important to highlight less obvious factors that contributed to the increase in the cost of the Ukrainian food basket. According to a survey by the Razumkov Center, 44 percent of Ukrainians have started purchasing the cheapest food products more frequently and paying less attention to their quality. This means that nearly half of Ukrainians are now forced to economize on food.

Cheap products will rise in price

Thus, in the consumer basket, basic products are rapidly becoming more expensive, while prices for more expensive goods remain almost unchanged.

"The wealthier we are, the more meat, dairy products, and cheese we consume. The poorer we are, the more bread and potatoes we eat. This situation with increased demand in the cheap segment is precisely what is creating additional demand, leading to price hikes in that segment," says the expert.

Inflation expectations

NBU head Andriy Pyshny stated that in the early months of this year, prices are likely to continue rising due to the ongoing impact of low harvests from last year and rising production costs. The National Bank forecasts that inflation for 2025 will reach 8.4%. The peak is expected in the second quarter, and from mid-year, according to the regulator, it will begin to decline.

The acceleration of inflation will be driven by low harvests, rising electricity prices, increased tariffs for gas and electricity transportation for businesses, possible power outages, the devaluation of the hryvnia, rising raw material costs, and a labor market shortage.

"The average monthly inflation could reach 13% for the year. By the end of the year, we expect inflation to be closer to 9%. In the baseline scenario, the factors that will exert pressure on costs, apart from the devaluation of the hryvnia, include market weaknesses. This means operational expenses for companies, tax increases for individual entrepreneurs, hikes in military contributions, and the inclusion of the Unified Social Contribution for individual entrepreneurs. All these will be passed on to the end consumer," says financial analyst Shevchishin.

Increase in electricity tariffs

Another significant factor contributing to the price increase of goods is, for example, the January hike in electricity distribution tariffs for businesses. The expert also notes that there may be a rise in tariffs from "Ukrzaliznytsia" for freight transportation, which will inevitably impact final prices for consumers, as companies will have to pass these costs onto buyers.

"In the second half of the year, as the new harvest arrives, we will see relief in the food basket," Shevchishin believes.

Moreover, due to the ongoing war in Ukraine, there is currently a moratorium on increasing tariffs for hot water, heating, and gas, but financial analyst Andriy Shevchishin notes that after active hostilities cease, international partners will insist on raising utility prices to "economically justified levels." This could mean an increase in utility bills by 30% or more, which would intensify financial pressure on Ukrainians.

What will become more expensive

Denis Marchuk, Deputy Chairman of the All-Ukrainian Agrarian Council, confirmed that the primary reasons for the price increase of products in 2024 are a combination of seasonality, economic factors, and the consequences of the war.

"Essentially, until the new season, we can expect the vegetable group to continue rising by about 15%," he shares his forecast, adding that the situation in the dairy market is also complicated.

Export restrictions to Europe have temporarily lowered procurement prices for milk, but the final cost for consumers is unlikely to change due to tax innovations, particularly the increase in fuel excise taxes.

"The increase in excise taxes on fuel and lubricants, which began in September, has not yet fully impacted the market. Traders still had stocks at the old price, but starting in January, fuel prices will affect production costs and transportation expenses," Marchuk explains.

He also believes that there will likely be no categories of products that will not become more expensive before the new season.

Financial analyst Andriy Shevchishin notes that, for example, dairy products are becoming more expensive due to rising feed costs, while meat prices are driven up by a reduction in livestock numbers and high maintenance costs. If meat prices grew slowly in 2024, this year the expert predicts a significant spike, which could lead to increased imports.

Forecasts for the upcoming harvest

In turn, Oleg Pendzin, a member of the Economic Discussion Club and economist, notes that food inflation in 2025 directly depends on how successful the year will be for Ukrainian agrarians, but no one can currently provide a forecast for this year's yields.

"No one knows what will happen this summer. What the temperatures will be like, how this will affect yields. Essentially, food inflation in 2025 directly depends on the success of the agricultural year. But no one knows what will happen," the expert says.

Prices in stores

Ukrainian retail chains are also cautious in their forecasts regarding further price increases.

"Price is a factor that depends on a number of conditions. This includes currency fluctuations, weather, logistical costs, and more. Seasonality also affects prices—for example, meat and milk prices are always higher in winter than in summer," say representatives from the Eco-market supermarket chain.

They also note that the vegetable group (potatoes, carrots, beets) is showing the highest price increase in 2025. The dairy group (milk, sour cream, butter) has also become more expensive.

Additionally, the supermarket chain mentions that despite inflation, sales volumes gradually increased in 2024. In particular, in Kyiv, according to the company’s internal research, the "feeling of rising prices" for food among consumers has surprisingly decreased compared to previous years of full-scale invasion.

"Also, along with the decrease in the 'feeling of rising prices' last year, there was a general decline in price awareness, meaning customers are paying less attention to prices than before," the supermarket's press service adds.

Meanwhile, ATB representatives report that inflation negatively impacts consumer demand as it leads to a decrease in purchasing power; however, on the other hand, it also has a stimulating effect on turnover. Consumers are purchasing the items they need today, as prices are constantly rising.

Increase in alcohol prices

Another issue has emerged unexpectedly: ATB notes that at the beginning of 2025, vodka prices, which have remained stable for the past two years, will begin to rise. Among the reasons are the increased costs of raw materials and electricity. The National Bank forecasts that inflation for 2025 will reach 8.4%.

Food group

Among other beverages, the most significant price hikes in 2025 are expected for cocoa, coffee, and juices (cherry, apple, orange).