Headline inflation in Moldova (chart) eased to 8.6% year on year (y/y) in February after picking up to 9.2% y/y in January due to higher regulated electricity and heating prices prompted by Gazprom's gas supply cut.

The average end-user electricity price decreased by 15% month on month (m/m) in February, after the government subsidised the prices paid by households and social institutions with the financial support from the European Union. In January, the average end-user electricity price surged by 50% y/y as the country switched from affordable electricity supplied by Transnistria (produced from the free gas supplied by Gazprom) to more expensive electricity purchased mainly from Romania, accounting for over 50% of consumption.

Core inflation eased to 6.0% y/y from 6.1% y/y in January and remains around the same level compared to December (5.9% y/y). Core inflation has remained pretty stable since April 2024 (around 6% y/y) while the overall inflation surged from 3.5% y/y (April 2024) to above 9% y/y in January.  The central bank has hiked over the same period of time the monetary policy rate from 3.8% to 6.5% but no further hikes are expected since the country’s economic growth is already fragile.

Food price inflation further increased in February 2025 to 7.9% y/y from 7.4% y/y in January and 7.2% y/y in December, as the prices of fruit and vegetables edged up by roughly 2% in the month to reach annual growth rates of 22% y/y and 29% y/y respectively.

Non-food prices increased by only 4.1% y/y after the 4.6%-4.7% y/y in December-January.

The tariffs of services, which include the energy prices, decelerated to 16.3% y/y from +18.0% y/y in January and +10.5% y/y in December (when the natural gas price was hiked -- not to be further reduced in February like the electricity price).