Romania’s National Bank (BNR) has revised downwards by 0.1 percentage points to 1.6% its estimate on the annual inflation rate to be recorded at the end of this year.

The inflation rate is expected to reach 3.1% by the end of next year, down 0.3 pp compared to the previous estimate.

BNR will thus postpone any increase in the monetary policy rate, Governor Mugur Isarescu said yesterday. The current rate is 1.75% per year, which is quite high, according to Isarescu.

Food prices are expected to record an annual increase of 7.1% at the end of this year, due to a decline in European fruit and vegetable production related to bad weather. Next year, food prices are expected to grow by another 4.1%.

BNR also expects the quarterly growth rate in final consumption to slow down in the second quarter of this year, as the impact of wage increases and the reduction of the standard VAT rate will dissipate. For the whole year, the final consumption will record growth, but lower compared to 2016.

Romania’s annual inflation rate reaches highest level in two years

editor@romania-insider.com