Ukrainian policymakers unexpectedly raised borrowing costs for the first time in four meetings in an attempt to tame inflation that’s accelerated faster than forecast.

The National Bank of Ukraine lifted the key rate to 13.5% from 13%, according to a statement published on Thursday. The decision was predicted by only one economist in a Bloomberg survey, while six analysts expected the rate to remain unchanged and one saw an increase to 14%.

Officials in Kyiv had previously signalled that rates would remain on hold into next year. But consumer inflation reignited during a hot and dry summer after robust foreign aid and tight monetary policy helped contain a surge in the wake of Russia’s 2022 full-scale invasion.

“In the coming months, inflation is likely to continue to rise in annual terms due to the further impact of food supply factors, large budget expenditures, significant pace of wage growth, and wider energy shortages during the heating season,” the central bank said in a statement.

The main drivers behind an up-tick in November to the highest level since July of last year were a smaller harvest compared with last year, as well as rising costs due to war-related labour shortages and frequent power cuts.  

Policymakers previously said they expected price growth to ebb starting in April, reaching 6.9% in 2025. 

“Inflation should decelerate as the situation in the energy sector improves and harvests increase,” the central bank said on Thursday.

  - Bloomberg