The National Bank has raised its average annual inflation forecast for 2025 from 4.9% to 7.3% (+2.4 p.p.) and for 2026 – from 3.8% to 4.7% (+0.9%)
This was announced by the First Vice President of the National Bank of Moldova Petru Rotaru, presenting the first Inflation Review this year. He noted that in the fourth quarter of 2024, annual inflation continued the upward trajectory that began in the middle of the previous year. The annual inflation rate increased from 5.2% in September to 7% in December. This was influenced by the growth of energy tariffs, last year's drought, and the increase in international prices for food and oil products. In 2025, according to the NBM forecasts, the average annual inflation will be above the upper limit of the range of fluctuations of the National Bank's target indicator (5% ±1.5 p.p.). Inflation is expected to accelerate in Q1 2025, gradually declining by Q3 2026 and slightly increasing by the end of the forecast period. The highest average annual inflation is forecast for Q1 2025 – 8.5%, and the lowest – by Q3 2026. This will be influenced to the greatest extent by regulated tariffs, food prices and core inflation, and to a lesser extent – by fuel prices. The National Bank notes that external risks and uncertainties prevail in this round of forecasts. It is noted that President Donald Trump’s mandate in the United States implies the return of trade tariffs and increased restrictions on international trade. At the same time, international markets are expecting a favorable outcome of the war in Ukraine, which will change the economic climate in the region, and in the context of the signing of a ceasefire agreement between Israel and the Gaza Strip, any escalation of the conflict may again contribute to the growth of oil prices. Economic growth in the euro area will be weak: 0.9% in 2025 and 1.2% in 2026, with the euro area inflation rate of 2.1% and 1.9%, respectively. The euro/dollar ratio is forecast at 1.03 in 2025 and 1.05 in 2026. The price of Brent crude oil is expected to decline from $80.7 per barrel in 2024 to $74.7 in 2025 and to $70.7 in 2026. Natural gas on world markets will rise in price in 2025 to $558.9 per 1,000 cubic meters and will decline to $461.6 per 1,000 cubic meters. International food prices will grow by 4.3% in 2025 after a 2.1% decline in 2024, but are expected to decline by 0.4% by 2026. The new inflation forecast takes into account inflationary external and internal risks: fragmentation of international trade and strengthening of the US dollar, vulnerability of prices for locally produced fruits and vegetables due to unfavorable weather conditions, escalation of the conflict in the Middle East and, as a result, rising energy prices, as well as adjustment of the mechanism for compensating heating costs. The political situation in Europe and tax incentives in Moldova may have a deflationary impact. Herewith, the uncertainty factors will be military conflicts in Ukraine and the Middle East, the size and timing of the adjustment of regulated tariffs, prerequisites for changing electricity tariffs at the end of the heating season, a decrease in the number of consumers in Moldova, uncertainty with agricultural production indicators in the new agricultural season, as well as partial liberalization in the car insurance market. //25.02.2025 – InfoMarket
