The National Bank raised the forecast for the average annual inflation rate for 2021 from 3.1% to 4.5%, and for 2022 - from 7% to 14%.
The new forecasts are contained in the 4th and last Survey on inflation for the current year, published by the National Bank of Moldova. It is expected that the annual inflation rate will reach a maximum value of 15.1% in the III quarter of 2022, and the minimum value - 4.1% in the III quarter of 2023. The NBM notes that the average quarterly annual inflation this year rose to 4.9%, and at the end of last quarter, annual inflation was 6.7%. This increase was due to internal and external factors. On the one hand, there is an increase in demand due to an increase in the income of the population, and on the other hand, the rise in prices for food, oil and other raw materials in the international market affected the dynamics of prices in the local market. The adjustment of tariffs related to regulated prices also had an impact. As noted in the NBM, if at the beginning of the year the global increase in pro-inflationary pressure was considered as a temporary effect, now the majority of the monetary authorities, as well as the IMF, warned about their strengthening and the need for measures to counteract the negative consequences. Thus, the current inflation forecast, as compared to the previous inflation report, was revised upward by the NBM. The inflation forecast scenario was developed under conditions of heightened uncertainty caused, in particular, by the lack of clear information on the increase in natural gas tariffs for household consumers and enterprises. The National Bank draws attention to the fact that in this context, the magnitude of the shock to regulated prices also depends on the compensatory measures of the government. The NBM indicates that risks and uncertainties will persist in the near future. This is due to an increase in world prices for energy and food resources, a decrease in production activities, and at the local level - with a number of factors, such as climatic conditions, the development of the pandemic situation and the magnitude of the final tariff adjustments. The NBM emphasizes that the annual inflation rate and core inflation will grow rapidly until the first half of next year, and then will rapidly decline by the end of the forecast period - III quarter of 2022. This trajectory will be largely supported by positive fiscal dynamics this year, recovery in external demand and economic recovery this year. The National Bank said it will continue to closely monitor the development of the consumer price index, internal and external macroeconomic situation, and at the right time will take the necessary measures to create monetary conditions to achieve its fundamental goal. // 05.11.2021 — InfoMarket
