Inflation in October continued to decline under the influence of a number of factors, including as a result of the previous monetary policy decisions, modest internal demand, appreciation of the exchange rate, diminution of electricity and natural gas charges. In October, the inflation entered the variation interval targeted by the National Bank of Moldova, reaching 6.3%, says inflation report No. 4 that was presented by the governor of the central bank Octavian Armașu, IPN reports.
“All the components of inflation, including the basic inflation, follow a downward trend. We see increased volatility in the case of fuel prices, which even reached a negative value at a certain time and now vary around figure 0. So, the last figure is -0.9. The modest domestic demand surely led to a pronounced negative trend in the case of basic inflation, which is the most persistent component of inflation,” the governor told a news conference.
Octavian Armașu noted that the National Bank will continue to pursue a simulative monetary policy to encourage internal demand and will simultaneously aim to achieve its objective to maintain inflation in the medium term within the variation interval of the inflation target of 5%.
According to him, not only the prices of products that form part of the consumer price index but also the annual rate of the industrial producer price index saw a slowdown in the growth pace.
At the same time, the agricultural producers do not hurry to export their products that are kept mainly in stock. They probably wait for a better conjunction on the market. The food price forecasts show that food prices continue to stagnate
“We do not yet see a robust recovery of internal demand, internal trade but already see particular signs of invigoration towards the end of the reporting period. We see that retail trade and whole trade increased slightly in July-August. This can be a sign that particular processes of recovery in economic activity started,” stated Octavian Armașu.
The recovery of domestic demand was stimulated by the rise in the volume of loans provided to private individuals. This component has recovered swiftly in the second half of the year owing to the relaxation of monetary policy.
