The annual rate of inflation this May was 2.8%, down 0.9 percentage points from the previous month, being lower than the lowest limit of the variation interval of ±1.5 percentage points from the inflation target of 5.0%. The inflation dynamics in May were determined by the modest aggregate demand and the effect of a high basic period in 2017. For the immediate period, the National Bank of Moldova anticipates a modest aggregate demand close to the potential, which will continue to generate disinflation pressure, IPN reports, quoting a press release of the institution.

Food prices contributed 1.7 percentage points to the annual rate of inflation, while the basic inflation and fuel prices 1.1 and, respectively, 0.5 percentage points. The regulated prices generated a negative contribution of minus 0.5 percentage points, by 0.1 percentage points lower than the previous month.

The monthly inflation rate in May was 0.4% up. The most significant price rises where seen in the culture and recreation sector following the 43.6% increase in prices of tourism abroad and the 1.2% rise in cigarette prices. The prices in education diminished following the 2.4% decline in crèche and kindergarten fares. The prices of motor vehicles and trailers decreased by 1.5%.

The 0.5% reduction in food prices in May, compared with April, derived from the lower prices of eggs (-18.4%), fresh vegetables (-3.1%), sugar (-1.8%) and dairy products and milk (-1.2%). The fuel prices increased by 1.8% influenced mainly by the tendencies on the international oil markets.

Starting with the second half of the third quarter, the risks associated with the inflation perspective have intensified. These derive from the international oil and raw material prices, the uncertainty about the duration of this rise, commercial dissentions between the main players of the world economy, vulnerability of prices of national agricultural products that depend on the weather conditions and the uncertainty about the 2018 harvest.