The National Bank has raised its forecast for average annual inflation for 2025 from 7.3% to 7.5% (+0.2 p.p.), but lowered it for 2026 - from 4.7% to 4% (-0.7 p.p.)
This is stated in the latest, second Inflation Review, which was published by the NBM. According to the medium-term forecast, the annual inflation rate will change direction and outline a downward trend during the forecast period. During the first two consecutive quarters of the forecast, the annual inflation rate will be above the upper limit of the fluctuation range and will return to this range starting from the fourth quarter of 2025, remaining until the end of the forecast period. According to forecasts, the annual inflation rate will reach a maximum of 7.8% in the second quarter of 2025 and a minimum of 3.6% in the third quarter of 2026. The annual inflation rate will be determined by the positive contribution of administered prices, core inflation, food prices, and, starting in the third quarter of 2026, fuel prices. However, from the second quarter of 2025 to and including the second quarter of 2026, fuel prices will have a negative contribution to the annual inflation rate. Risks and uncertainties related to the external environment have increased in the current round of forecasts. "After the Trump administration imposed significant tariffs on a number of countries and then delayed the implementation of many of them for 90 days, the level of tariffs that will take effect on July 10 remains uncertain. Although the world's largest economies have shown a willingness to negotiate trade agreements with the US, and some have reported progress in this direction, the announced deadline is quite short, meaning that trade tensions remain. Peace talks over the war in Ukraine appear to have reached a dead end, but the events surrounding them have helped justify decisions to increase defense spending in Europe. "The economies of the EU countries continue to face a slowdown in industrial growth. In these conditions, along with stimulating monetary policy, fiscal measures aimed at restoring the EU economy are expected," the National Bank notes. Oil prices will be mainly affected by global trade tensions, as well as OPEC+ decisions to increase production. Natural gas prices in Europe will depend on the ability of countries to fill their reservoirs by the next cold season. Global food prices are expected to develop in a balanced manner. 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 2.2% and 1.9%, respectively. The euro to dollar ratio is forecast at 1.12 in 2025 and 1.17 in 2026. The price of Brent crude oil is expected to decline from $80.7 per barrel in 2024 to $67.2 in 2025 and to $63.1 in 2026. Natural gas on world markets will become cheaper in 2025 to $529.9 per 1,000 cubic meters and to $476.7 per 1,000 cubic meters in 2026. International food prices will grow by 2.6% in 2025 after a 2.1% decline in 2024, and are expected to grow by 1.2% in 2026. The new inflation forecast takes into account inflationary external and internal risks: fragmentation of international trade and strengthening of the euro, economic recovery in the eurozone, vulnerability of prices for locally produced fruits and vegetables due to uncertain weather conditions, and external financing. A deflationary impact may be caused by a decline in global economic activity due to trade tariffs, a decline in oil prices, and a decrease in the number of consumers in Moldova. At the same time, factors of uncertainty include military conflicts in Ukraine and the Middle East, the size and timing of adjustments to regulated tariffs, prerequisites for changing electricity tariffs at the end of the heating season, and agricultural production indicators in the new agricultural season. // 13.05.2025 – InfoMarket.
