The rate of inflation in Moldova over the past few months has dropped. In October 2022, the annual inflation was 34.6% - the highest level the past 23 years. In July 2023, it decreased to 10.7%. It is estimated that the rate of inflation in autumn will fall under 10%. But the people wonder why they don’t feel this decline. The expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță provided more explanations.
The expert said that two basic things should be primarily taken into account. “Firstly, the decline in inflation does not mean a decline in prices. Inflation is an indicator showing how the prices grow. Last year, inflation was of 34%. This means the prices rose by 34%. Now inflation decreased to 10.7%, but this means only that the prices grew by 10.7%, which is three times less than last year. But the prices anyway rose. So, lower inflation shows that the prices rise slower, but they anyway rise,” noted Veaceslav Ioniță.
However, during the summer months there was deflation for food products, which is the prices decreased. In June, the food prices declined by 0.2%, while in July by 1.2%. In 2020, Moldova witnessed the lowest rate of inflation in its history, of only 0.39%. Such a level of inflation hadn’t been seen even in the USSR, at least during its last 15 years of existence. Two years of considerable rise in prices followed, both of services and of food products.
“Let’s stop at food products. Until May 2023, the average prices of food products grew by 62% on 2020. What in 2020 could be bought for 100 lei, in May 2023 could be purchased for 162 lei already. Neither the pensions nor the salaries grew so much. This means that this year Moldova’s population, with the incomes they have, can buy less food products than in 2020. The people in 2023 have smaller real incomes and purchasing power than in 2020. In other words, they are poorer than in 2020. That’s why the 14% decline in food prices during the two summer months of 2023 is too small to be felt. Following this decrease, the food prices remain by 59.4% higher than in 2020. This is too much to speak about the population’s feeling that the prices go down,” explained Veaceslav Ioniță.
According to him, time is yet needed until the figures of the National Bureau of Statistics are felt by the citizens.
