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2.8.3 Inflation and monetary policy

In terms of inflation, the central bank raised the projection to 3.1% for
2021 due to the supply-side factors, which are caused mainly due to
rising world commodity prices and disruption in global supply chains.
For 2022, the central bank expects the inflation rate to slow down to
2.4%.

The government expects inflation rate to stabilise at 2.4% in 2022, with
price pressures, due to the uncertainty related to energy prices of the
primary products on world stock exchanges, expected to slow down in
the second quarter of 2022.

The IMF forecasts North Macedonia to post an average annual inflation
of 3.1% in 2021 that will slow down to 2.2% in 2022. In 2020, the
country posted inflation of 1.2%.

In December, North Macedonia’s government decided to freeze the
prices of some basic food products due to the rising inflation. The
decision will be valid until January 31, 2022, with the possibility of
extension depending on the market conditions.

The prices cannot exceed the level of prices on these products applied
on December 1, 2021.

In 2021, the inflation started to increase rapidly since April this year and
stabilised for a while only in June.

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