The jump in fares for public transport in the capital to 30 hryvnias and for private minibuses to 25 hryvnias will have a much deeper impact on the economy than just additional expenses for passengers. The increase in the cost of transportation can trigger a long-term chain reaction: from a decrease in the purchasing power of citizens to a general acceleration of inflation across the country.
Financial analyst Andriy Shevchyshyn emphasizes that the economic consequences of this step will appear gradually and will affect even those areas that at first glance are not related to passenger transport.
How a chain reaction works: stages of impact on business
The economic effect of the increase in transport prices will unfold according to the following scenario:
-
Decrease in consumer demand: In the first stage, residents of the capital will be forced to allocate more money from their family budget for daily trips. This will reduce the amount of free money that people spend on other goods and services (entertainment, clothing, cafes).
-
Pressure on employers: Workers will begin to demand from companies a wage increase or direct travel reimbursement to offset the new costs.
-
Cost increase: For businesses (stores, restaurants, service centers), this will mean increased operating costs for staff retention.
-
Cost transfer to the buyer: Entrepreneurs will include the additional funds that a business will spend on employee salaries or logistics in the final cost of their goods and services.
-
Labor market adaptation: An adaptation period is expected, during which some Kyiv residents will begin to actively look for work closer to home in order to minimize daily transportation costs.
Andriy Shevchyshyn:
"There is no direct connection with freight logistics here - it has long taken into account fuel prices. However, the chain of influence through personnel costs is much longer. The increase in price will be moderate, but it will be spread over all goods and services in a wide layer. When it becomes more expensive for workers in cafes, shops or hairdressers to get to work, they have to pay more. As a result, your coffee or tie will cost a few hryvnias more. Any product will simply increase in price a little."
Calculation of new transport costs for Kyiv residents
For the average worker who commutes to and from work every day, the new tariffs create a significant financial burden.
| Travel scenario | Daily expenses | Monthly expenses (for 22 working days) | Share of the average "net" salary in Kyiv ($36,300 UAH)* |
| Public transport (2 trips per day for 30 UAH) | 60 UAH | 1 320 UAH (+440 UAH to the old tariff) | Up to 3,6% |
| One minibus (2 trips per day for 25 UAH) | 50 UAH | 1 100 UAH | Up to 3,0% |
| Minibuses with transfers (4 trips per day for 25 UAH) | 100 UAH | 2 200 UAH | Up to 6,1% |
*Note: According to the State Statistics Service, the average nominal salary in Kyiv is just over UAH 41,000. After deducting taxes (personal income tax and military levy), the average “hand-in” salary is about UAH 36,300.
Impact on all-Ukrainian inflation
The transport reform in the capital will significantly change the national economic indicators. Since more than 100,000 people officially and actually live in Kyiv, 10% of the population of Ukraine, any significant local increase in tariffs will automatically be reflected in the overall consumer price index (CPI) and accelerate the rate of inflation in the country.
