OREANDA-NEWS. June 15, 2010. As it is noted in the report of the National Bank of Moldova, the direct impact of the tariff increase in January of this year already been absorbed. The growth of rates in May will have less impact on consumer prices compared with the growth in January 2010, However, inflationary pressure on supply side is still there.

Annual inflation in May falls in the NBM forecast for inflation at the end of 2010 at the level of 10,8%. The slowdown in inflation is due mainly to slower growth in prices for industrial goods, tariffs on services and lower prices for food products (the latter depends on the weather conditions and seasonal factors).

The NBM emphasize that the core inflation over the past 12 months amounted to 5,1% and is within the designated target at the end of the year. Core inflation is estimated by the National Bureau of Statistics by excluding prices for food and beverages, fuel, products and services with regulated prices. The core inflation is affected by non-monetary factors. Monthly rate of core inflation (including increased prices for industrial goods) is still in a downward trend by the end of the year as a result of the strengthening of lei against the currencies of major trading partners of Moldova - euro area and Russia.

Regulated prices in May rose by 1,9% compared to the previous month, due mainly to the increase in prices for imported natural gas. As a consequence, gas tariffs increased by 14,1%, 17,5%, and 15,9%, grew tariffs for heat energy from "Termocom" and HEPS-Nord, which has led to increase in central heating price in May by 4.6%. Fuel prices increased by 0,6% in May due to the increased cost of coal by 0,6% and fuel - 1%.

With the trends in the foreign exchange market, where because of financial problems in several countries of the euro area there has been substantial devaluation of the European currency, the Moldovan lei has grew against euro, which corresponds to the expectations of the NBM to slow down inflationary pressures.

The National Bank has announced that it will continue to monitor closely the evolution of macroeconomic indicators, the situation in money and currency markets, international economic trends, and, in case of deviation of the medium-term forecast from the target, will promptly and adequately use the tools of monetary policy.