OREANDA-NEWS. March 21, 2011. The annual basic inflation rate was 3.3%, down 0.2 percentage points from the previous month. The National Bank’s press release reads that the data of the National Statistics Office regarding the inflation rate correspond to the National Bank’s forecast published in the first this year Report on inflation.

The National Bank notes that the monthly inflation rate in February was 1.2% due to the growth of tariffs for services rendered to the population – by 2.6%, food prices – by 1.1%, prices for nonfoods – by 0.2%.

The monthly inflation rate dynamics in February 2011 was mostly caused by the seasonal factor, growth of the administrative prices as a result of approval of the new tariffs for gas and central heating, and by the components belonging to the basic inflation. The annual basic inflation rate continued the tendency towards reduction started in December 2010, with a 3.3% growth for the last 12 months (0.2 p.p. lower than in the previous month).

In February 2011, the monthly basic inflation rate was reached 0.5%. Such dynamics was influenced by the growth of prices for major components of the basic inflation, as a result of the second circle effects due to the rise in prices for fuel and foodstuffs, and a slight devaluation of the MDL against Russian ruble and the European currency. Despite the fact that the annual inflation rate has kept the tendency towards reduction began in January 2011, the 2.2 p.p. difference between the growth of the index of consumer prices and the basic inflation reflects the increased impact of non-monetary factors on the inflationary process.

According to the National Bank, the monthly growth of food prices in February 2011 was lower than in January 2011, mostly as a result of the growth of prices for potato (14%) as a result of the growth of prices in the region, and the reduction of the home reserves, and the rise in prices for milk and dairy products (3.3%), as a result of the growth of price for purchasing raw materials and transport costs. Prices for fuel in February 2011 decreased 0.6% in comparison with January 2011, due to the reduction of prices for liquefied gas – by 4/8%, as a result of the 0.4% reduction in the price for this kind of fuel in the regional market and for fuel.

Such evolution was partially compensated by the slight growth of prices for coal (1.2%), as an effect of the continuation of the heating season in February and the reduction of its stocks. Reduction in the annual pace of the administrative prices, started in September 2010, remained in February 2011, amounting to 8.8% (1.5 p.p. lower than in January 2011).

According to the National Bank, the oil- and foodstuffs prices evolution in the international markets remain the major inflationary risks. The tariffs growth pace in February was lower than the growth reported in early 2010, the fact that will decrease pressure on the annual inflation. Therefore, there are real preconditions for continuation of the deflation process in the following months. The National Bank stated it strictly controls the economy evolution in the country, as well as the international economic environment to provide realization of the goal set in the medium-term monetary policy strategy to maintain prices stability through the adequate use of the monetary policy instruments.