Economic experts warn of inflationary domino effect as Moldova's diesel prices approach €1.50
Rising fuel costs in the Republic of Moldova are poised to trigger a broad inflationary domino effect, potentially pushing the annual inflation rate into double digits by the end of 2026.
Economic expert Oleg Verejan warned that the impact extends far beyond public transport, threatening to destabilize prices for food, consumer goods, and essential utilities. While official estimates currently project a 3.5% inflationary uptick, Verejan suggests that indirect effects could double this figure.
Macroeconomic risk and energy pressure
According to Verejan, a 50% increase in fuel costs historically correlates with a 6% rise in general inflation. Speaking on Radio Moldova, he noted that if current geopolitical tensions in Ukraine and the Middle East persist, inflation could climb to 8% this year, potentially breaching the 10% threshold.
Diesel remains the primary concern, accounting for 65% of Moldova’s fuel consumption. High industrial demand has driven diesel prices upward faster than gasoline, creating significant overhead for the transport and manufacturing sectors.
Monetary response and regulatory ceilings
On March 19, the National Bank of Moldova (BNM) opted to maintain its benchmark interest rate at 5%. The decision aims to balance price stability while assessing the impact of previous monetary tightening.
The BNM reported that annual inflation stood at 5.06% in February, slightly above the previous month but remaining within the bank's target range. Overnight credit rates remain at 7%, while required reserves for MDL-denominated assets are held at 18%.
Retail price surge at the pump
The National Agency for Energy Regulation (ANRE) announced new price ceilings effective Friday, March 20. Gasoline will surpass the 28 MDL mark, approximately €1.43 (approx. 28 MDL), while diesel continues its ascent toward 29 MDL (approx. €1.48).
With the government possessing limited direct levers to intervene in a market economy, the burden of stabilization rests largely on the BNM’s ability to dampen consumption through interest rate adjustments and credit restrictions.
Translation by Iurie Tataru
