The annual average inflation will be 1.8% in 2020 and about 4.4% in 2022. The annual pace of regulated prices will decrease in the first half of the year, but will rise starting with the third quarter of 2021 until the end of the forecast period. The annual pace of food prices will remain at relatively constant levels in the first three quarters of the forecast period and will then increase significantly until the first half of next year. Later, the food prices have a stable pace, says the first inflation report for this year that contains forecasts for 2021 and 2022, IPN reports.
“The reduced annual pace of food prices in 2021 will be due to the aggregate internal disinflation demand and the effect of high annual basis. The subsequent rise will be influenced by the effect of products with a powerful seasonal character and the late effect of 2020,” the governor of the National Bank of Moldovan (NBM) Octavian Armașu told a news conference.
The report says the annual pace of fuel prices will witness increased volatility. “The effect of the collapse of oil prices in the spring of 2020 will be used up and, starting with the second quarter of 2021, the growth pace of fuel prices will be restored. This will follow an upward trend until the third quarter of 2021 and later, starting with next year, will decrease for two consecutive quarters, after which will remain relatively stable,” explained the governor.
According to him, the annual rate of inflation decreased from 2.32% last September to 0.39% last December due to the effects of the COVID-19 pandemic. “The year 2020 ended with a constriction of economic activity in most of the countries following the restrictions imposed because of COVID-19. There are hopes of a return to the normal pace together with the start of the vaccination process,” said Octavian Armașu.
According to the report, the basic inflation will grow continuously throughout the forecast period and will have similar values during the last two quarters of the forecast period. The rise in the basic inflation will be determined by the imported inflation and the increase in excise duties at the start of 2021 and in 2022.
The annual rate of inflation will continue to decrease insignificantly in the first quarter of 2021 and, starting with the next quarter, will rise until the end of the forecast period. Beginning with 2022, it will return to the variation interval close to the inflation target, which will be probably approached towards the end of 2022.