Romanian PM: The 12% decrease in bread price proves effectiveness of VAT reduction for bakery products

Romania’s National Statistics Office INS confirmed a 12 percent decrease in the price of bread, which proves the effectiveness of the VAT reduction for bakery products, said the Romanian prime-minister Victor Ponta. Moreover, if the VAT cut is also found to trigger a reduction in tax evasion, the system could be expanded starting 2014, Ponta added. Romania applied a lower VAT for bread in September this year. The new VAT is 9 percent, down from the previous 24 percent. According to the INS data for November this year, consumer prices in Romania held steady from the previous month, while prices of food dropped 0.2 percent. Meanwhile, the annual inflation rate was 1.83 percent. The most important price decrease in food items, of almost 4 percent, was recorded for fruits and canned fruits. The prices of non-food items and services tariffs went up 0.1 percent month-on-month. Romania’s Central Bank BNR has revised down its inflation forecast for this year, from 3.1 percent to 1.8 percent, but also for the end of 2014 – from 3.1 percent to 3 percent. Irina Popescu, irina.popescu@romania-insider.com