Moldova’s inflation marginally up to 5.5% y/y in August

Moldova’s inflation marginally up to 5.5% y/y in August
By Iulian Ernst in Bucharest September 11, 2019

Moldova’s headline inflation accelerated marginally to 5.5% y/y in August from 5.4% y/y in June, the statistics bureau, BND, informed on September 10 — one day before the central bank’s monetary board meeting. The consumer price index edged down for the third month in a row amid a seasonal decrease of food prices.

The food prices (+8.4% y/y in August) have been and will remain until the end of the year one of the key inflationary drivers. The regulated energy prices might induce a certain negative inflationary contribution in the coming quarters as natural gas prices will decline.

The board hiked the refinancing rate by 0.5pp to 7.5% at the end of July.

Moldova’s inflation has gradually accelerated from 0.9% y/y in November-December to 5.5% y/y in August. Moldova targets 5.0% y/y +/-1.5pp inflation.

Moldova’s central bank (BNM) lowered the inflation rate forecast for 2019 to 5.0% on August 7, compared to its 5.1% forecast in the previous quarterly inflation report. The forecast for 2020 was, however, revised upward from 6.5% to 6.7% in the latest Inflation Report unveiled on August 7.

BNM notes that the annual inflation rate will increase by the end of the current year and will reach the maximum level of 8.0% in the fourth quarter of 2019, after which it will decrease continuously until the end of the forecast horizon, when it will fall to the minimum level of 3.9% in the second quarter of 2021.