The National Bank of Moldova raised its average annual inflation forecast for 2025 from 7.5% to 7.7% (+0.2 percentage points), but lowered it for 2026 from 4% to 3.9% (-0.1%)
This is stated in the latest, third Inflation Review, presented by the National Bank of Moldova (NBM) on August 14. According to the information provided, the annual inflation rate will tend to decline in the current year and in the first half of next year, and then stabilize until the end of the forecast period (until the second quarter of 2027). This year, the inflation rate will be above the upper limit of the fluctuation range, and starting in the first quarter of 2026, it will return and remain within a range close to the lower limit until the end of the forecast period. The maximum value will be in the third quarter of this year (+7.4%), and the minimum in the third quarter of 2026 (+3.5%). The annual core inflation rate will be relatively stable until the beginning of next year, then it will tend to decline until the end of the forecast period. The annual level of food prices will tend to decline until the third quarter of 2026, after which a slight increase is expected until the end of the forecast period. The annual level of regulated prices will decline until the first quarter of 2026, after which it will follow a relatively stable trajectory until the end of the forecast period. Fuel prices will rise throughout the forecast period, although they will be negative until the first quarter of 2026. Aggregate demand will recover by the end of this year, after which it will tend to decline with a slight recovery by the end of the forecast period. Real monetary conditions will constrain aggregate demand throughout the forecast period. "In the current forecast round, the external environment continues to present an uncertain picture, characterized by predominantly disinflationary risks. While in the previous forecast round the trade war initiated by President Donald Trump was only in its initial phase, it can now be said to be in full swing, with no clear end in sight in the near future. At the same time, the lack of results from peace talks between Russia and Ukraine led the European Commission to adopt an 18th package of economic sanctions against Russia, while President Donald Trump threatened to impose tariffs on countries importing Russian goods. Despite the easing of geopolitical tensions in the Middle East, the risk of escalation remains, which means that the risks of its impact on oil prices remain. Natural gas prices in Europe continue to be determined by temperature and the degree of gas storage facilities' fill rates. Global food prices are showing a steady upward trend, which is in line with the expectations of the latest forecasting rounds," the National Bank notes. Economic growth in the euro area is expected to be weak: 0.9% in 2025 and 1.1% in 2026, with inflation in the euro area at 2% and 1.6%, respectively. The euro-dollar exchange rate is forecast at 1.13 in 2025 and 1.19 in 2026. The price of Brent crude oil is expected to fall to $69.8 per barrel in 2025 and to $65.8 in 2026 (in 2024 - $80.7). Natural gas on world markets will fall in price in 2025 to $399.6 per 1,000 cubic meters and to $360.5 per 1,000 cubic meters in 2026. International food prices, after falling by 2.1% in 2024, will rise by 5.4% in 2025, but by 2026, growth will be more moderate, at 1.9%. The new inflation forecast takes into account external and internal risks. The vulnerability of domestic fruit and vegetable prices to weather conditions may exert inflationary pressure. An increase in external loans and grants is forecast for 2026, which will facilitate the implementation of reforms in the national economy and create additional pressure on inflation and its growth. The growth of external financing will stimulate further growth of excess liquidity in the banking system, which in the short term will have a positive impact on loans provided by the financial and banking sector and, accordingly, on aggregate demand. The slowdown in economic growth in the EU and the even more pronounced strengthening of the euro, the fragmentation of international trade, the reduction in the number of consumers in Moldova, and uncertainty regarding this year's harvest may have a deflationary impact. At the same time, factors of uncertainty will include differences in the dynamics of raw material prices, the situation in the Middle East and the development of peace talks between Ukraine and Russia, as well as the size and timing of adjustments to regulated tariffs. // 14.08.2025 – InfoMarket.
