The National Bank forecasts average annual inflation for 2024 at 4.7%, and for 2025 – 4.5%.
President of the National Bank of Moldova Anca Dragu announced such data when presenting the first Inflation Review this year. She noted that the annual inflation rate will remain relatively stable throughout the forecast period. Inflation will fluctuate around the target of 5% ±1.5 percentage points and will remain within the established range throughout the forecast horizon. The minimum value will be in the second quarter of 2024, as well as in the second and third quarters of 2025, and the maximum value will be in the first quarter of 2025. The annual rate of core inflation will increase slightly in the first half of 2024, after which it will decrease slightly to the end of the forecast horizon (in the last quarter it will increase only slightly), on average in 2024 it will be 6.4%, in 2025 – 5.1%. Food prices will decline at the beginning of the forecast horizon, after which they will remain unchanged until the end of the forecast period (2.6% this year and 3% next year). The annual growth rate of regulated prices will decrease in the first half of this year, after which it will grow rapidly until the first quarter of 2025, then, in the next quarter, it will decrease and remain stable until the end of the forecast horizon (5.9% in 2024 and 7.8% - in 2025). Fuel prices will increase slightly until the end of the forecast horizon, but at a moderate pace, with the exception of the third quarter of 2024. The National Bank’s new forecast is based on assumptions that economic growth in the euro area in 2024 will be 0.5% (instead of the previously predicted 0.6%), and in 2025 – 1.3% (instead of 1.8%). In Russia, on the contrary, economic growth will be slightly greater than previously predicted - 1.7% in 2024 (previous forecast - 1.3%), while the forecast for 2025 is comparable to the dynamics in the euro area (+1.3%). Inflation in the euro area will be 2.2% in 2024 (0.3 percentage points less than previously forecast), and in 2025 it will be slightly lower than forecast in the previous review, at 2% (previously - 2.2%). In Russia, inflation this year will be higher (6.7%) than previously expected (5.2%), and in 2025 – 4.7% (instead of 4%). The euro to dollar ratio is expected in 2024-2025 at the level of 1.09 and 1.12 (the forecast has not changed), and the dollar-to-ruble ratio will be 92.7 and 96.4 (previously the forecast was 95.6 and 95.9, respectively). Euribor rates will be higher than previously predicted: in 2024 - 3.7% (instead of 3.6%), in 2025 - 3.4% (instead of 3.1%). Oil prices are expected to decline. Thus, the price of Brent oil in 2024 will be $75.5, and next year – $72.6 per barrel (instead of $82.5 and, accordingly, $77.2). World natural gas prices are also expected to decline: by the end of 2024, they will average $455.5 per 1 thousand cubic meters (previous forecast - $561.9 per 1 thousand cubic meters), and in 2025 - $406.2 per 1 thousand cubic meters (instead of $544.3). Prices for agri-food products on the world market will decrease by 3.7% in 2024 (a decline of 0.2% was previously predicted), while in 2025 prices are expected to rise by 3.4% (the previous forecast assumed an increase of 2%). Anca Dragu noted that the forecast was made taking into account a number of uncertainties in the foreign market. These include tensions in the Middle East, longer blockages of transport across the Red Sea, war in Ukraine, rising consumer prices in Turkey and Russia, and possible temporary supply shocks affecting food prices internationally. Currently, deflationary risk is associated with a slowdown in economic activity in the euro area, and uncertainty is caused by tightening monetary policy in the region and around the world, as well as the geopolitical situation after the 2024 elections. Key internal uncertainties include the timing and extent of tariff adjustments on regulated prices, changes in inflation rates of compensation for energy resources provided to the population during the cold period of the year. Indicators of external financing and the new season's harvest, the flow of refugees and weather conditions will also affect. // 13.02.2024 — InfoMarket
