Skopje, 27 January 2023

Stabilizing the prices of primary commodities, further diminishing of the supply stagnation, as well as the tight international financial conditions that will reduce demand should contribute to inflation rates stabilization this year. In an interview for Deutsche Welle, the Governor of the National Bank, Anita Angelovska Bezhoska, said that the reduction of the import prices pressure, especially those of energy and food, will be of utmost importance for domestic inflation. Also, the measures that the National Bank takes should contribute to stabilize the inflationary expectations, as a significant factor affecting inflation, simultaneously affecting a part of the inflation index, the one that is more sensitive to changes in demand.   

Considering the forecasts of the international financial institutions for the stabilization of the primary commodities prices on the world markets and the expectations for the conduct of precautionary macroeconomic policies, inflation deceleration is forecasted so this year it would be reduced at 8 to 9%, while in the medium run, the inflation will continue to decline, reducing to the level of 2.4% and 2% in 2024 and 2025, Angelovska Bezhoska said, adding that the expectations are in line with the international institutions forecasts for  reduction of both global and domestic inflation this year.  

Regarding the measures taken by the National Bank, the Governor said that at the end of 2021 the central bank started taking additional measures in view of the present price pressures, as well as the pressures on the foreign exchange market, given the monetary strategy of maintaining a stable exchange rate of the denar.  

"It is generally known that inflation reduces the real disposable income of households, especially the low income ones, rising the uncertainty and thus, adversely affecting both consumption and investment decisions, in other words, the growth prospects. Therefore, the central banks around the world are committed to price stability maintenance in the medium term. The manner and the intensity of the central banks' reactions depend on the nature of the inflation, that is, on the contribution of the individual factors that affect it, on the monetary strategy and on the instruments at their disposal," Angelovska Bezhoska said.  

The risks to this forecast, especially in terms of the future movements of energy and food prices are still significantly pronounced due to the uncertainty related to the duration of the war in Ukraine, as well as the possible further unfavorable effects of the enduring , whereby the uncertainty related to the inflation forecast remaining high, as emphasized in the interview.