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The increase in gas and electricity tariffs was envisaged by the NBM in its latest inflation forecast and it will not have a noticeable impact on inflation dynamics in the medium term.

The increase in gas and electricity tariffs was envisaged by the NBM in its latest inflation forecast and it will not have a noticeable impact on inflation dynamics in the medium term.

Governor of the National Bank of Moldova (NBM) Octavian Armasu stated this while answering a question of InfoMarket agency after presenting to journalists the decision of the Executive Committee of the NBM on monetary policy, according to which the National Bank reduced the base rate applied to main short-term monetary policy operations by 1.5 p.p. for the first time in the last 2 years - from 21.5% to 20% per annum. Octavian Armasu noted that in the inflation forecast, which the National Bank published in November, the baseline scenario included an increase in tariffs for natural gas, electricity and other energy resources. "What we see happening now fits into our assumptions and will not have a significant impact on the trajectory of inflation," said the head of the National Bank. Referring to the evolution of inflation, he reminded that the annual inflation rate in October 2022 was 34.6% in Moldova, up 0.6 percentage points compared to September. This was lower by 0.4 p.p. compared to the value projected in the Inflation Report for November 2022, mainly due to an untimely reflection of the heat tariff. This deviation was due to the negative deviation of all components of inflation, except for food prices. The upward trend of food prices in October was due to the hydrological drought in the summer of this year, which affected the harvest of agricultural products, which was superimposed on cost pressures on the background of rising tariffs for electricity and gas supplied to economic entities, as well as fuel prices. The NBM Governor stressed that the adjustment of electricity tariffs is stronger than expected, and the positive deviation of food prices indicates the risk of a slightly higher inflation trajectory than expected in Q4 2022, but it will not have a significant impact on the dynamics of inflation in the medium term. // 06.12.2022 - InfoMarket

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