Attacks on warehouses and logistics centers could add up to 0.6 pp to inflation in Ukraine

Russian strikes on businesses, warehouses and distribution centers are forcing Ukrainian companies to restructure supply chains and increasing delivery and storage costs. According to the National Bank of Ukraine (NBU), this factor is already adding to inflationary pressure, with most of the impact expected to materialize in the autumn.

Consumer inflation in Ukraine accelerated to 7.7% year-on-year in July, up from 7.2% in June. According to preliminary NBU estimates, price growth continued to accelerate in August. Overall, inflation dynamics were broadly in line with the central bank’s expectations, although inflation was slightly above the forecast trajectory due to new infrastructure damage.

The NBU currently estimates that logistics restructuring and the resulting increase in costs could add around 0.4–0.6 percentage points to annual inflation by the end of 2026. Most of this effect is expected in the autumn, as additional logistics costs gradually feed through into consumer prices.

At the same time, the NBU does not expect a sharp surge in prices. The impact will be spread over time and partly contained by competition among businesses and weaker consumer demand. Damage to a warehouse or distribution center also does not mean that companies will pass all of their additional costs on to consumers.

According to the NBU, logistics and storage account for around 8% of the average consumer price of goods. Competitive pressures mean businesses can pass on only part of their additional costs, so the impact of attacks on logistics infrastructure is expected to feed into prices gradually.

Tags: Ukraine, prices, food