Consumer price inflation decreased for the fourth month in a row in Moldova in February, to a still very high value of 25.9% y/y, according to the latest data published by the statistics bureau BNS. Consumer prices increased by only 0.95% month on month.

Further rate cuts are expected particularly as the economy could use any impetus to recover from the deep dive seen in Q4.

Moldova was hit by inflation at an earlier stage and that’s why it will emerge from this crisis earlier than other countries in the region, head of the European department at the International Monetary Fund Alfred Kammer commented during his visit to Chisinau recently.

The National Bank of Moldova (BNM) slashed the monetary policy rate by 3pp to 17% on February 7, announcing expectations of quick disinflation throughout this year and hopes for the annual inflation to enter the target band (5% +/-1.5pp) in the second quarter of 2024.

It was the second rate cut after the BNM hiked the key rate to 21.5% in August to fight rampant inflation.

"We now see that the core inflation is slightly decreasing in Moldova. We saw that the BNM already relaxed the monetary policy," said Kammer.

On the other hand, Kammer stated that inflation has not disappeared and therefore efforts must be maintained to quell rising prices, especially because inflation remains a major issue that affects the poor the most.

Food prices were 26.5% up y/y as of February, while the non-food prices posted comparatively slower growth of 16.3% y/y. The prices of services, which includes energy, were, however, still almost 40% up y/y.