Inflation in 2011 greater than expected

The rate of inflation for 2011 will be greater than the National Bank's (NBM) August forecast of 8.4% and is likely to exceed the one-digit target, NBM Governor Dorin Dragutanu told Radio Moldova. “From the last forecast, many things happened that have changed the macroeconomic situation. For instance, food prices, which usually drop in the summer months, this year decreased less than we expected. This was due to weather conditions, but also to a rise in agrifood exports that came on a higher demand on international markets. Also, let's not forget the rise in gas tariffs, which will be followed by a rise in heating tariffs. While in making the forecast we considered a gas tariff increment, we didn't think it would be as high as 23.2%. All these jeopardize the annual inflation target of 8.4% for this year”, said Dragutanu. An updated official forecast is to be published in early November. “But it's already clear that inflation will peak in quarter four of this year and quarter one of 2012, and we'll see an annual inflation of 10 percent and maybe over 10 percent”, he added. Dragutanu said inflation could start slowing down again from the second quarter of 2012. “We don't yet know how the new agreement with Gazprom will look like, but experts say there are circumstances that would make the gas price lower. It was also predicted that global food prices wouldn't rise so fast, and the prices of petroleum products, which started to decrease slightly this summer, may further drop or at least would not rise dramatically”, he said. Dorin Dragutanu expressed his hope that at the end of next year inflation would not be higher than 7.4%.