OREANDA-NEWS. May 07, 2013. The National Bank lowered the forecasted average annual inflation rate for 2013 by 0.5 p.p. and kept the same level for 2014 in its Second Report on Inflation. Dorin Dragutanu, president of the NB, noticed that the inflation rate will be 3.8% (0.3 p.p. less than in the previous forecast) by the end of 2013 and 3.5% – by the end of 2014.

The changes in forecast are caused by decreasing influence of meteorological factors on foodstuff prices. External indicators display the tendency of oils and gas prices increasing, and foodstuff prices stabilizing. The internal demand is expected to increase in 2013-2014 due to stimulating monetary policy. The basis inflation rate will be higher than expected due to more intensive depreciation of national currency.

The prices for foods will grow not as speedy as it was expected in January. The Regulated Tariffs will grow in 2014, but against the years 2010-2012 it will slow down a little, said the president of the NBM. Over 8 next quarters the inflation rate is forecasted to stay within special rate (5%± 1.5%). The inflation rate will come close by 5% in 2015.

Talking about middle-terms, the deflation processes, supported by weak internal demand, is expected to take place. These possible middle-term deflation risks come from the external economic influence and the probable crisis excavation in the Eurozone. As to inflectional risks, they can occur, because of some deterioration in the Middle East or, as a result, of essential oil prices growth.