The National Bank of Moldova predicts inflation to stand at 5.1% in 2019 and at 6.5% in 2020, driven by food prices and and core inflation throughout this period. Regulated prices will see a temporary shock, while the rise in fuel prices will be insignificant. This was stated by NBM governor Octavian Armașu at a press conference Thursday.
Annual inflation has been affected by food prices, which rose 3.8% in March and 4.5% in April. Last year’s good harvest in Moldova and in the region drove food prices down in the summer and fall of 2018. However, as export markets invigorated and food supply diminished, price trends reversed both domestically and externally. Rising food prices is not only a domestic trend, Armașu emphasized.
The upward trend of the Consumer Price Index, fueled by food prices and core inflation, has been tempered mainly by the reduction of regulated prices. After a marked rise in 2017, regulated prices saw a downward trend in 2018 which continued into January-April 2019. In March and April 2019, regulated prices dropped by 2.3% on the similar period last year.
Octavian Armașu added the inflation outlook also takes in consideration the assumption that tariffs will be adjusted in the second half of 2019. After a temporary steep rise, the rate of regulated prices will be back to 0.9 – 1.3% in the second half of 2020. Food prices will be rising in 2019 reflecting domestic and international trends, with a reversal in 2020. Fuel prices will follow a downward trajectory in the medium term.