It looks as if the Ukrainian economy will finish 2026 almost where it started. Prices are creeping up: inflation could exceed 10%, while GDP may be stuck around zero. This gloomy outlook comes from financial analyst Oleksiy Kushch.
There are several reasons, and they are all pressing at once. The hryvnia is weakening, energy is getting more expensive, and businesses must spend increasingly just to keep running. In September annual inflation already reached 10%, while the economy expanded by a modest 0.4% in the second quarter. If nothing changes, the year will end very differently to how the National Bank of Ukraine (NBU) sketched it in summer.
The economy is almost standing still
What the numbers show
Kushch believes that, by the end of the year, real GDP will show almost zero growth. Simply put, the country will produce roughly as much as it did last year.
Fresh statistics support this view. According to revised data from the State Statistics Service of Ukraine (Derzhstat), in the second quarter GDP grew by only 0.4% compared with April–June 2025, and by 0.3% versus the first quarter after adjusting for seasonality. In summer the NBU had expected +1.8% for the year.
It may seem that zero and 1.8% are not far apart. But behind those percentages lie production, sales, investment and the business activity of the whole country.
Costs rise, production does not
It is becoming ever more expensive simply to operate a business. Wages, raw materials, electricity, delivery, repair of damaged equipment, generators for outages — all of this costs money.
Here is a simple example. A small manufacturer spends 800,000 hryvnia a month. Costs rise by 15% — and it now needs 920,000 hryvnia. Somewhere it must find an extra 120,000 hryvnia, even though orders may not have increased.
This is the story across the board — in food production, metallurgy, construction and trade. Some postpone buying new equipment, others scale back parts of the process. Companies keep running, but the economy does not grow as a result.
Inflation is already 10%
September changed everything
Summer was calm: in July prices rose by 0.3%, in August by 0.1%. In September, over a single month, everything became more expensive by an average of 2.1%.
On an annual basis inflation reached 10%. For comparison: it was 8.1% in August and 7.2% in June. Since the start of the year, i.e. from December 2025, prices have risen by 8.4%, and three months remain.
Eggs up 43.6%
Food prices rose most in September, and eggs are in a class of their own — up 43.6% in one month. A pack that cost 70 hryvnia now costs 100 hryvnia.
Here is what else noticeably rose in September:
- sugar — up 8,3%;
- fuel and lubricants — up 5,2%;
- educational services — up 17,4%;
- clothing and footwear — up 8,5%;
- water supply — up 5,6%, sewerage — up 5,5%.
Some things became cheaper: fruits by 5,7% and vegetables by 2,3%. But seasonal discounts did not save the overall picture. This hits hardest families for whom a large share of wages goes on food, transport and utilities — unavoidable expenses.
Will inflation exceed 10% by December?
There is a nuance. The September 10% compares September 2026 with September 2025, not with the start of 2026. For calendar-year inflation to exceed 10%, prices must add just over 1.5% across October–December.
Whether that will happen depends on electricity, fuel, imports and food. Pre-holiday shopping, when demand for certain goods traditionally shifts, will also play a role.
The dollar, fuel and electricity
The exchange rate hits price tags
The main risks, according to Kushch, are a weak hryvnia and expensive energy. Both factors directly raise business costs.
Take a company that buys equipment priced at $5,000. At an exchange rate of 42 hryvnia that is 210,000 hryvnia, while at 45 it is already 225,000 hryvnia. An extra 15,000 hryvnia on a single purchase. This is an illustrative calculation, not an exchange-rate forecast, but it shows why the dollar affects not only exchange booths but also shop prices.
When fuel gets pricier, everything does
In September fuel rose by 5,2%, and over the year by as much as 46,2%. Drivers feel it at the pump, but the problem is that fuel is embedded in the price of almost every product: trucks deliver goods to supermarkets, farmers put diesel into machinery, factories keep production lines running on generators.
Let’s do the math. A truck burns 1,500 litres of diesel a month. If the litre gets 4 hryvnia more expensive, the carrier spends an extra 6,000 hryvnia. Ten such trucks — that’s already 60,000 hryvnia a month. Sooner or later this shows up in delivery costs and then on the shelf.
Power outages also cost
When the power goes out and a business switches to a generator, unit costs rise because of fuel and maintenance. Bakeries pay more to bake bread, cold-storage facilities pay more to keep products chilled, and 24/7 factories lose productivity because of forced stops. The NBU has already directly linked September’s price spike to Russian strikes on production facilities, warehouses and logistics and to more expensive fuel.
Same wages, less buying power
What a shop receipt shows
Most people understand inflation not from charts but from a receipt: the shopping list is the same, but the total is different. In August 2026 the average salary was 31,892 hryvnia. But “average” does not mean most people earn that, and the key issue is what you can buy with it.
Imagine a family that spends 15,000 hryvnia a month on food, transport, household items and services. Prices rise by 10% — and they now need 16,500 hryvnia. That is an extra 1,500 hryvnia a month, or 18,000 hryvnia a year. If wages have not risen, they will have to cut back on holidays, major purchases or savings.
Besides, everyone feels inflation differently. Those who drive a lot feel it in fuel, families with children in tuition, food and clothing.
Will pay rises save the day?
In July the NBU forecasted that real wages would rise by more than 12% over the year. But the labour market is very uneven. Where there is a shortage of staff, employers raise pay to retain personnel. Where sales are weak, there is simply no money for that.
For example: a 25,000 hryvnia salary is increased by 5% — it becomes 26,250 hryvnia. But if prices rose by 10%, that pay now buys less than before the raise. So it all comes down to which rises faster — wages or prices.
NBU versus Kushch: two scenarios
What the National Bank expected
In its July Inflation Report the National Bank of Ukraine (NBU) assumed 1.8% economic growth for 2026 and 10% inflation. The calculation relied on large public spending, development of defence production and better harvests. For 2027 the inflation forecast was 6.9%, for 2028 a return to the 5% target, and GDP was expected to accelerate to 2.8–3% a year.
But those figures were prepared in summer. Since then September inflation has come in higher than the NBU’s trajectory, and the risks to energy and logistics remain. Essentially, Kushch describes a worse scenario in which expensive resources and exchange-rate pressure will slow the economy through the end of the year.
The budget depends on aid
When the economy does not grow, the state’s financial stability matters all the more. Money is needed for defence, social programmes, healthcare, education and infrastructure. Kushch previously estimated the budget deficit at roughly 27 billion dollars, although he said resources are enough for the main obligations for a quarter or two.
International assistance will still be necessary because domestic funds are insufficient for all expenditures. According to Kushch, after agreements on financing quick practical decisions are needed. It is important not only how much help arrives but when: timely funds allow the government to plan spending without surprises.
What the last months of the year will decide
October, November and December will show how accurate Kushch is. Right now annual inflation is already 10% and the economy is barely growing.
Much depends on energy: the more businesses run on generators, the higher costs will be. Pressure could rise from oil prices, the exchange rate and import costs. Indicators in industry, trade and agriculture will indicate whether the economy can pick up a bit towards the end of the year.
For now, inflation above 10% and zero GDP growth is an analyst’s forecast. Official statistics confirm both rapid price rises and weak growth, but the final figures for 2026 will only be known after the year ends.
