BNM maintains predictions for inflation in 2011, but changes predictions for next year

The National Bank of Moldova (BNM) maintains its May predictions for inflation in 2011 at 8.4%, Info-Prim Neo reports. BNM Governor Dorin Dragutanu told a Thursday press conference that at the beginning of the year, the inflation was lower than expected because of low international oil prices. However, they later rose and the internal market also saw an increase in gas and electricity prices, fueling inflation. June, as a rule, brings deflation along, as food prices, especially of fruit and vegetables, drop. However, this time heavy rains caused food prices to rise and inflation reached 7.7%, higher than in May. “Considering external and internal factors (a possible increase in gas prices), we maintain our prediction at 8.4%”, said the BNM governor. Meanwhile, the central bank changed its forecast for 2012 from 5.7% to 7.4%, expecting inflation to drop back to 5.7% by the end of the year. The forecast was influenced by the unexpected rise in food prices on international markets, possible fluctuations in EUR/USD rates and, domestically, an augmentation of some indirect taxes (like VAT and excises). “The inflation process in Moldova has stabilized. There is no economy where prices aren’t growing. Any economic growth is followed by price rises. However, inflation must be controlled as a high rise in prices will instantly affect people and can hinder the long-term economical development”, said Dorin Dragutanu. Over the last 18 months, annual inflation is significantly lower than in previous years. This shows the first results of the inflation control measuers implemented by BNM since 2010, said the BNM governor.