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In 2021, inflation was 10% yoy, in particular, food prices rose by 13.3%. However, subjective observations suggest a much higher rate. This is not surprising, because any observer “fixes” primarily those prices that change rapidly, but “does not notice” those prices whose dynamics are moderate.

According to the State Statistics Service, during 2021 bread prices rose by 18.7%, eggs – by 19%, sunflower oil – by 38.8%, sugar – 28.3%, etc. Everyone noticed it. But the fact that fruit had fallen by 10.2% at the end of the year was noticed only by those who are interested in statistics. As a result, we have “the average figure” which does not always match the subjective perception of price dynamics.

In 2021, higher food prices were caused by the rapid rise in world food prices: for the year the FAO food price index increased by 23%, from May 2020 (local minimum) – by 47%. However, the influence of this factor has already been largely realized.

In 2022, the biggest intrigue is how devastating the factor of extremely high gas prices will be for the economy. Not all business costs can be shifted to the consumer. Obviously, some businesses will have to close down, which will have a corresponding effect on GDP dynamics.

How will the increase in gas prices affect crop yields (because of higher prices for mineral fertilizers)? What will be the gas tariffs for the population after the end of the annual tariff? Without answers to these fundamental questions, any inflation forecast for 2022 would be, to put it mildly, unreasonable.

The main pro-inflation risks are of costs nature. Despite numerous messages of the NBU about the stable consumer demand, it is the factor of limited demand that may play a key anti-inflationary role in 2022. But this same factor will restrict the the economic growth potential.Vitalii Lomakovych, Founder and Chairperson of the