Ukraine had spent the better part of a year fighting on two fronts—against Russia in the east and against inflation at home. The second fight is now at risk.
Two wars, one inflation bill
Consumer prices rose 7.9% year-on-year in March 2026, the National Bank of Ukraine reported, exceeding the bank’s forecast for the second consecutive month. Fuel prices drove the overshoot, surging 23.4% year-on-year as the war in the Middle East pushed global oil costs higher.
Services inflation reached 12.8% as higher energy costs spread through transport, phone tariffs, and restaurants. Core inflation edged up to 7.1%.
The fuel surge worked its way through to specific goods, the NBU reported. Buckwheat prices climbed after a poor harvest. Sunflower oil rose as processors lifted prices on a supply deficit and rising global benchmarks. Fish and seafood cost more as EU import prices tracked fuel upward. Taxi fares, freight rates, and driving school fees were all more expensive for the same reason.
“We’re trying to walk on a razorblade.”
The data arrived as NBU governor Andriy Pyshnyi was in Washington for the IMF and World Bank spring meetings, where Kyiv’s delegation came in part to keep Russia’s war on Ukraine on the global agenda.
“We’re trying to walk on a razorblade,” Pyshnyi told Reuters. He put the Middle East war’s potential impact on Ukrainian inflation at 1.5 to 2.8 percentage points; secondary effects—including fertilizer prices—would be “quite significant.”
Fuel is not the only pressure point. Russia's strikes on Ukraine's energy grid have pushed electricity costs for businesses high enough to show up in restaurant bills, mobile phone tariffs, and household services—the NBU cited both shocks in its March analysis.
Ukraine's inflation is being squeezed from two directions: oil markets responding to the Middle East, and a power grid under sustained Russian attack.
Rate cuts give way to rate hike warnings
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The trend had been promising. Consumer prices fell from a 15.9% peak in May 2025 to 8% by December—beating the NBU’s own forecasts—allowing the bank to launch its first rate cut since the invasion in January 2026, reducing the key rate from 15.5% to 15%.
More cuts had been built into its year-end projections. March ended that trajectory: the bank held rates and has since signaled it is prepared to raise them if oil prices keep climbing. An updated forecast is due on 30 April.
Hungary’s incoming prime minister told reporters in Budapest on Monday that he would keep Hungary’s opt-out from the loan.
Pyshnyi welcomed the defeat of Hungarian Prime Minister Viktor Orbán, whose government had blocked the EU’s €90 billion ($106 billion) loan package for Ukraine.
But Péter Magyar, Hungary’s incoming prime minister, told reporters in Budapest on Monday that he would keep Hungary’s opt-out from the loan, citing the country’s strained budget. The loan Orbán blocked remains blocked.
One figure Pyshnyi raised in Washington is beyond any monetary forecast: about 6 million Ukrainians remain abroad. “The longer it lasts,” he told Reuters, “the higher the risk of Ukrainians abroad to be assimilated”—people a postwar economy will need.
