I remember the shock of standing in a Lviv supermarket last summer, staring at egg prices that had tripled almost overnight. What used to cost 30 hryvnias ($0.70) for a 10-pack suddenly jumped to 60, then 85, even 90 hryvnias ($2.15).

I stopped eating eggs for a while, checking prices each time I went grocery shopping. By spring 2025, the price eventually settled around 55-75 hryvnias ($1.30-1.80) and has more or less stayed that way.

The economic cascade: from power grid to grocery aisles

Those eggs tell a bigger story about Ukraine’s economic transformation. Russian attacks on energy infrastructure decimated the power grid, creating electricity shortages that drove power costs soaring.

Higher electricity prices pushed up the cost of lighting, heating, and water, while transport costs exploded as fuel became more expensive and imports more essential. With continuous inflation pressure, chicken farms faced higher energy bills and workforce costs and had to pay more for bird feed.

This cascade effect captures something unprecedented in modern economics: Ukraine now operates under a triple burden where record-breaking military spending, household survival pressures, and long-term sustainability questions intersect in ways not seen anywhere since World War II.

As Ukraine faces a $20 billion funding shortfall and a $7 billion defense crisis, its economic model offers a real-time case study of how democratic societies reorganize themselves—from state budgets to breakfast choices—around survival demands.

The state’s burden: when taxes turn into tanks

Ukraine has achieved a dubious global record: spending 31% of its GDP on military expenses, the highest of any country worldwide. By the first quarter of 2025, Ukraine had already spent 75% of its entire state budget on defense, burning through resources at a pace that would exhaust most nations.

Defense Minister Denys Shmyhal announced Ukraine needs “at least $120 billion” for military spending in 2026, even if the war ends.

This creates an unusual fiscal reality: Ukraine’s domestic revenues fund the military while international aid covers civilian needs. The $172 million allocated to defense daily—more than half of all government spending—comes from domestic sources, but the government continues funding civilian programs through external assistance.

The parallel funding model means Ukrainian taxpayers see their contributions disappear into defense, while civilian improvements depend on donor generosity.

Even as officials warn of a 300 billion hryvnia ($7.27 billion) defense shortfall for the final months of 2025, the government still announces new spending: increased “National Cashback” funding—a program that reimburses households for part of their utility spending and also rewards purchases of Ukrainian-made products—grants for small entrepreneurs, and teacher salary bonuses.

The household burden: when grocery shopping becomes a strategy

For ordinary Ukrainians, the state’s military spending creates economic pressures that ripple through daily life. Grocery shopping now involves checking multiple stores for better prices, timing fruit and vegetable purchases around seasonal peaks, and constantly substituting proteins based on what families can afford.

This isn’t just inflation—it’s a reorganization of household economics. Food prices rose 23.9% annually through August, but the impact varies dramatically by region and income.

While someone earning Kyiv’s average salary of 40,546 hryvnias ($983) can absorb price shocks, families in central Ukraine’s Kirovohrad Oblast—where salaries average just 19,500 hryvnias ($473)—face different calculations entirely.

Many families adapt through the shadow economy—a network of unreported work representing 30% of Ukraine’s GDP. This includes everything from tutoring lessons paid in cash to small repairs that never appear on tax forms.

For many households, shadow income provides the margin between getting by and going under. The government largely tolerates this parallel economy, recognizing that families need survival strategies even as the IMF pressures Ukraine to formalize more economic activity.

Can Ukraine outlast the economics of war?

Ukraine’s economic model raises fundamental questions that extend far beyond its borders. The country cannot indefinitely spend three-quarters of its budget on defense while depending on international donors to fill civilian gaps. Yet military necessity does not allow a reduction in security spending.

This challenge confronts every democracy supporting Ukraine: how long can societies sustain unprecedented military spending while maintaining the civilian welfare that legitimizes democratic governance?

The sustainability question for Ukrainian families comes down to endurance versus adaptation. Those with education, connections, or cross-border skills may emigrate—but only women can cross borders easily, as military-age men face severe travel restrictions.

Others continue the daily calculus of survival economics: choosing between heating and food, present needs and future planning, individual comfort and collective security.

These pressures are reshaping Ukraine’s economic geography. Western regions—Lviv, Ivano-Frankivsk, and Zakarpattia—maintain relatively stable economies with strong international connections. Eastern areas near fighting zones struggle with basic economic functions. Central regions find themselves between these extremes, while Kyiv operates as an economic island with its own dynamics.

Testing the limits of democratic resilience

Unlike historical conflicts where entire populations mobilized for war production, Ukraine demonstrates how economies can simultaneously maintain civilian functions while dedicating unprecedented resources to defense.

Ukraine’s model of separate defense and civilian funding streams—necessitated by Western aid restrictions—creates structural imbalances that force impossible choices between accountability and efficiency.

The government faces parallel pressures: cracking down on the shadow economy that helps families survive versus accepting reduced tax collection during wartime. At the same time, the IMF demands higher taxes on war-weary citizens.

These tensions preview challenges that may extend far beyond Ukraine’s borders as global security environments deteriorate. If Ukraine—with massive international support and existential motivation—struggles to balance military necessity with civilian welfare, how would other democratic societies handle similar pressures?

Ukraine’s adaptation strategies continue to prove that societies can endure far more economic disruption than most economists thought possible. But whether this resilience can outlast Russian aggression depends not just on military aid or economic support but also on resolving the fundamental tension between democratic accountability and wartime efficiency—one grocery bill at a time.