National Bank of Moldova revises downwards annual inflation rate against background of disinflationary trends

Chisinau, 27 October /MOLDPRES/ - The National Bank of Moldova (BNM) has revised downwards the annual inflation rate to 6.3 per cent for 2016, against 6.7 per cent, as it has earlier anticipated, and respectively, seven per cent in 2017, against 4.4 per cent, as it forecast in last August. It is for the fourth time this year when BNM revises downwards the inflation for 2016, after it had diminished it to 10.1 per cent in February 2016, and made the highest reduction of the forecast up to seven per cent.  

The annual inflation rate for the first two quarters of forecast will be under the lower limit of the variation interval of the inflation target of ± 1.5 percentage points against five per cent. Subsequently, the inflation rate will get back and maintain within the variation interval till the second quarter of 2018, BNM Governor Sergiu Cioclea said while unveiling the report on inflation.     

The head of the central bank noted that, in the third quarter of 2016, the annual inflation rate had stood at 4.5 per cent, by 3.4 percentage points less than then one of the previous quarter. In September 2016, the inflation dropped to three per cent. The diminution of the annual inflation rate on the concerned period was due preponderantly to “the modest domestic demand, effect of a high basis of comparison associated to the depreciation of the national currency in the year before, as well as due to the gradual dissipation of the effect of the increase in the tariff for electric energy in July 2015.” The economic activity “under its level of balance, on medium term, will determine increased disinflationary pressures on behalf of the aggregate demand.”    

According to the BNM estimations, the contribution of prices for food products to the annual inflation rate is maintained significant and will have an ascendant trend up till the fourth quarter of 2017, and which it will drop. The average annual rate of prices for food products will be of 7.3 and 5.7 per cent this year, and respectively, next year.

The annual rate of regulated prices will significantly increase till the second quarter of 2017, after which it will stabilize. The annual average rate of regulated prices will be of 4.2 and 2.8 per cent in 2016 and, respectively, next year, Sergiu Cioclea said. On the other hand, the prices for fuels will increase up to 13.9 per cent in the third quarter of 2017, as a result of a recent rise in international prices for oil. The annual average rate of prices for fuels will be of -2 and 11 per cent this year, and respectively, in 2017.

Also, the pause on the currency market, gradual increase in the world demand and temperate increase in prices for raw materials set the initial trajectories of the evolution of the world economy in 2017. Therefore, after more rounds of consecutive forecasts, which showed disinflationary pressures of the external environment, in the present round of forecast, the hypotheses on the evolution of the external environment signal pro-inflationary pressures, the BNM governor added.      

(Reporter V. Bercu, editor M. Jantovan)