Romania's headline inflation would hit 7.5% at the end of the year to rise up to 8.6% at the end of the second quarter (Q2) next year as the temporary energy bill subsidies are phased off and ease down to 5.9% at the end of 2022, according to the revised inflation outlook revealed by the National bank of Romania (BNR) on November 11.

The scenario assumes that the energy goods' prices (up 22.9% YoY at the end of this year) would resume growth after the subsidies are lifted - and the annual increase would remain strong (+16.0%) in 2022.

A substantial deceleration is anticipated only in the last part of the eight-quarter projection interval, on account of base effects and assuming that the current inflationary pressures dissipate.

As for the adjusted CORE2 inflation, BNR outlines among the underlying fundamentals the sharp upward adjustment of inflation expectations by both economic agents and bank analysts.

Stronger inflationary pressures merged and are projected to linger in the case of the adjusted annual CORE2 inflation rate, which is seen reaching 4.3% in December 2021, 3.9% in December 2022 and 3.3% in September 2023.

andrei@romania-insider.com

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