Consumer inflation came in at 4.2% m/m, above both consensus (3.2%) and our forecast (3.4%), pushing annual inflation up to 32.4%. Elevated energy prices and ongoing supply disruptions due to the prolonged conflict, along with a pro-growth policy stance and worsening expectations, pose upside risks to the inflation outlook.

Economic activity has been weaker than implied by soft indicators, even before the conflict. The longer and deeper-than-expected impact of the war poses clear downside risks to our pre-conflict 2026 GDP growth forecast of 4%, where a more severe trade-off on growth could happen, depending on the external financing needs.