Romania's headline inflation rate eased to just over 2.2% in October from 2.5% in September and 2.7% in August, falling deeper beneath the 2.5% center of the interval targeted by Romania's National Bank (BNR).

The overall consumer price index increased by 0.22% in October compared to September.

The inflation rate was dragged down during the past three months (August to October) by food prices, which increased by 0.11% in October (versus the 0.70% m/m increase in October 2019).

The annual growth in food prices decelerated to 4.3%% year-on-year in October, from nearly 5.6% in July and 5.7% in April.

Fuel (energy) prices remain the main downward driver of inflation as they contracted by 8.4% since the beginning of the year.

The harmonized consumer price inflation calculated based on the EU-defined basket eased to 1.8% yoy in October, from 2.1% yoy in September.

The BNR lowered its inflation forecast for December 2020 to 2.7% under its August Quarterly Inflation Report, from 2.8% envisaged in the spring forecast.

In its latest rate move, on August 5, the BNR cut its refinancing rate to 1.5%. Romania still has resources to use interest rate cuts and liquidity injections to stimulate the real economy sector, finance minister Florin Citu said in an interview with Radio Guerrilla on October 28.

"Inflation will not rise, and the interest rates will continue to fall. Interest rates have fallen every month this year and will continue to fall. Romania still has room to push the economy through interest rates. Minimum required reserves can also [be slashed] so we can inject more liquidity into the economy, and push the economy," Citu told Radio Guerrilla.

(Photo: Bizroug/ Dreamstime)

iulian@romania-insider.com