I don't know the official rules of Ukrainian transliteration, but "chai" woudl correspond to "чаі" which is not correct.

That's very strange. This is the sentence that I see displayed right now above this comment thread. Also I just copy-pasted "мед і чай" from your comment into a test box in the Incubator and it works.

So either it was a glitch, or maybe you accidentally got an English character there when you entered the sentence ("мед і чай" vs "мед i чай", can you see the microscopic difference? :D)

Try again and see, if it's still the same, it must be a bug D:

The transliteration rules used by Duo are unknown, but it looks like it is BGN/PCGN. There is a converter for it.