Inflation in Romania down to 6.6%, lower than expected

Romania's annual inflation rate decreased to 6.6% in March, down from 7.2% in February and 14.5% in March 2023, according to a report from the National Institute for Statistics (INS). Analysts were expecting a slightly lesser decrease in the annual rate.

In monthly terms, the inflation was 0.42%, half of that in February. This marks the second consecutive decrease in the inflation rate, following an unexpectedly dynamic start of the year, spurred by tax increases, paving the way for the National Bank of Romania to cut the key rate in May.

Food goods increased in price by 0.25% compared to February 2024 and by 2.8% compared to March 2023. Non-food goods saw prices increase by 0.57% compared to the previous month and by 8.06% year-over-year. Meanwhile, services became more expensive by 0.35% compared to February and by 10.2% compared to March last year.

Since the beginning of the year, consumer prices have risen by 2.4%, still a high dynamic compared to the period before 2022.

The National Bank of Romania's estimate was that inflation would decrease to 6.5% per year at the end of March. However, in its last monetary policy decision, the central bank indicated that it expects inflation to follow a higher trajectory than anticipated in its February quarterly report.

Erste was expecting a decrease in inflation to 6.9%, compared to an average of 6.8% among analysts. ING saw a decrease in inflation to 6.7%, according to Profit.ro.

According to OECD recommendations, Romania should keep a tight monetary policy until the inflation is clearly on track to meet the central bank's target. After that, it should achieve greater tax revenues to fund priority spending.

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