OREANDA-NEWS. November 07, 2012. As presenting the 4th Inflation Review for 2012, Dorin Dragutanu, NBM president informed that NBM had raised the inflation projection by 0.2 p.p. to 4.1% for 2012 and by 1.4% to 5.3% for 2013. The change is explained by higher global oil prices than expected and stronger influence of weather conditions on food prices expected next year.

As for the global economy, expectations are invariably pessimistic, Dorin Dragutanu explained. There are expectations for swings in oil prices between the risk of lower demand for oil due to a slowdown in the global economy and the risk of failed oil deliveries due to tensions in the Middle East. Rates of a growth in oil prices are forecasted to be much lower than those within the last 2 years. Risks of changes in some regulated prices have also grown.

According to Dorin Dragutanu, during the next 4 or 6 quarters experts expect greater pressure imposed by gas and power prices. The drought of this summer, the lower demand risk and food prices projection change have become one more factor to change the inflation forecast, Dorin Dragutanu said. Experts foresee a more dramatic growth in food prices in 2013. However, it will be lower than that in Q3, 2011, which has been the record-breaking for the last three years.

Main deflationary mid-term risks may arise due to a deeper recession in the area of euro. NBM projects that within the next 8 quarters inflation will be limited to the 5% ± 1.5 p.p. target, with the limit being temporary exceeded in Q2, 2013, Dorin Dragutanu says.

If the risk arises of inflation’s deviation from the mid-term target, the National Bank of Moldova is going to use all range of its instruments and measures to bring the inflation rate down to the target set.