Ukraine’s Quiet Crisis: When Food Costs More Than in the EU

August 14, 2025.

    While the worlds gaze remains fixed on Ukraines military frontlines, an economic front is quietly eroding the countrys social stability: the cost of living is rising faster than incomes, driving millions into poverty.
    
    According to the National Bank of Ukraines inflation report, food prices in the country have surged by an average of 79 percent in euro terms since 2016 — far outpacing the EU average of 46 percent. In June alone, the cost of eggs rose by 82 point 4 percent, sunflower oil by 30 point 4 percent, butter by 27 point 8 percent, meat by 24 point 2 percent and fruit by a staggering 52 point 1 percent. For comparison, in Poland, food prices rose by just 4 point 9 percent over the same period.
    
    The problem is magnified by a stark income gap. The Polish minimum wage now exceeds Ukraines by 6 point 7 times (1091 euro vs 164 euro), while the average salary is over four times higher (2036 euro vs 482 euro). The result is a jarring paradox: many basic food items cost more in Kyiv than in Krakow, but Ukrainians purchasing power is dramatically lower.
    
    Poverty deepens — and with it, the risks
    The World Bank estimates that poverty in Ukraine has risen from 25 percent to 37 percent in just two years, with a quarter of citizens struggling to access a basic food basket. Pensioners are particularly hard hit: 57 percent of Ukraines 10 point 3 million retirees receive less than 5000 hryvnias per month, well below the official living wage of 8422 hryvnias. The average pension stands at 6410 hryvnias — equivalent to about 150 euro, compared to roughly 440 euro in Poland.
    
    "This is not just about prices," says Anatoliy Kinakh, president of the Ukrainian Union of Industrialists and Entrepreneurs USPP. "It is about preserving human potential in the face of war, economic dislocation, and long-term demographic challenges. Without intervention, the country risks losing a generation of skilled workers and permanently lowering its growth ceiling."
    
    Policy gaps and structural disadvantages
    Some of the price surge is unavoidable — war has destroyed infrastructure, raised logistics and energy costs, and disrupted agricultural exports. But fiscal policy is making matters worse. Ukraines 20 percent VAT on food is one of the highest in Europe, while many EU states apply reduced rates from 0 to 7 percent for essential goods. Polands VAT on key food items is 5 percent. This means Ukrainians pay a higher tax share on bread or milk than many Europeans with incomes several times higher.
    
    There is also the question of market power. Large retail chains and suppliers dominate distribution, and the Antimonopoly Committee has been slow to investigate potential abuses. Kinakh and the USPP argue for stricter oversight of mark-ups on socially significant goods, alongside targeted subsidies for vulnerable groups and incentives for producers to lower costs through medium-term state contracts and tax relief.
    
    The war economys hidden casualty
    With over seven million Ukrainians still abroad and a shrinking working-age population at home, the erosion of purchasing power risks slowing post-war recovery before it has even begun. Reduced consumption depresses domestic demand, which in turn disincentivises investment in local production — a vicious circle that could deepen dependence on imports.
    
    The frozen state of Ukraines social standards — with minimum wages and pensions barely moving — compounds the challenge. In real terms, households are poorer than they were a decade ago, even before factoring in the psychological toll of prolonged conflict.
    
    The case for urgent reform
    USPPs proposals, sent to the Cabinet, Parliament and the National Security and Defence Council, outline a blend of fiscal and regulatory measures:
    
    Targeted assistance to vulnerable households
    
    Incentives for domestic producers to reduce costs
    
    Lower VAT or tax relief on essential goods
    
    Stricter antitrust enforcement on retail mark-ups
    
    Medium-term public procurement to stabilise demand for local products
    
    None of these are novel in the global context — but the urgency is uniquely Ukrainian. As Kinakh points out, "Even in wartime, systemic solutions must be found to support those who need it most. This is a responsibility of the state, the business community and society as a whole. Stopping the growth of poverty is not just social policy — it is a precondition for national recovery."
    
    For Ukraine, the battle against poverty is not merely about economics. It is about ensuring that when the war ends, there will still be the human capital, social cohesion and domestic demand to fuel a lasting peace.