Inflation – new historic low in 24 years


Consumer prices decline 0.3 pc in June..

Year-over-year inflation rate in Romania reached a new historic low of 0.66 percent in June as consumer prices declined nearly 0.3 percent in June 2014 from May 2014, amidst falling prices for food and services, data released on Thursday by the National Statistics Institute (INS) reveal.
In May 2014, compared with the previous month, prices for food dropped by 0.7 percent, service fees were down 0.2 percent, while prices for non-foods went up 0.1 percent. The average price increase overall over the past 12 months (July 2013 – June 2014) compared with the previous 12 months (July 2012 – June 2013) computed against the consumer price index was 1.7 percent, while computed against the harmonised computer price index was 1.5 percent. Food prices increased by an average of 0.11 percent since late 2013, while non-food prices advanced 2.13 percent and services 0.95 percent. Compared with June 2013, food prices were smaller by 3.18 percent, on the average, while non-food prices are 3.02 percent more expensive and service 2.77 percent more expensive. Average monthly inflation in the first half of 2014 was 0.2 percent, compared with 0.3 percent in the same period of the year before.
‘There is no risk for deflation in Romania. If you look at the average annual rate, it is around 2 percent, bigger if it tends below 1 percent, so what I mean is they are uncertainties overall and the fact that the favourable developments in prices is also related to the developments in agri-food prices. There is also the effect of the smaller Value-Added Tax (VAT) that will vanish in September, and also uncertainties over the crude prices. If current comments are anything to go by, crude prices can go both ways. So there are not very many uncertainties, there are two we mentioned separately: the demand deficit and improvements in inflationary anticipations. The public and the markets believe increasingly more that Romania has reached a province of low inflation. We are not sure whether or not the trajectory, which is sensibly improved from the early year trajectory will go on to 2015 or ends in the second part of the year,’ Governor of the National Bank of Romania (BNR) Mugur Isarescu said earlier this July.
Also, the INS data show that FOB (Free on Board) –CIF (cost, insurance, freight) trade deficit was of RON 10.211 billion (EUR 2.285 billion), in the first five months of 2014, RON 744.3 million (EUR 117.6 million) more than in the same period last year. In May 2014, the FOB-CIF trade deficit was of RON 2.364 billion (EUR 534.5 million), RON 246.4 million (EUR 45.2 million) more than in May 2013. FOB exports amounted to RON 19.265 billion (EUR 4.341 billion) and CIF imports amounted to RON 21.629 billion (EUR 4.876 billion).
Compared to May 2013, exports increased by 10.2 percent in values expressed in lei (7.9 percent values expressed in euros) and imports increased by 10.4 percent in values expressed in lei (8.1 percent values expressed in euros).
Compared to April 2014, in May 2014, exports increased by 3.1 percent in values expressed in lei (4.0 percent in values expressed in euros) and imports increased by 0.5 percent in values expressed in lei (1.3 percent in values expressed in euro). In the period between January and May, the FOB exports amounted to RON 95.366 billion (EUR 21.274 billion) and CIF imports amounted to RON 105.577 billion (EUR 23.560 billion).
In the first five months of the year, the intra-community trade of goods (Intra EU28) amounted to RON 67.848 billion (EUR 15.152 billion) for dispatches and to RON 79.514 billion (EUR 17.760 billion) for arrivals, representing 71.2 percent of the total exports and 75.4 percent of the total imports. In the period January 1- May 31 2014, the extra-community trade of goods (Extra EU28) amounted to RON 27.517 billion (EUR 6.122 billion) for exports and to RON 26.062 billion lei (EUR 5.799 billion) for imports, representing 28.8 percent of the total exports and 24.6 percent of the total imports.
Industrial production and energy resources have positive figures
Romania reported good figures for industry as well. According to INS, the industrial production went up by 8.7 percent in gross series over the first five months and by 10.1 percent in seasonally-adjusted series. Between January and May 2014, the industrial production was 8.7 percent higher on a year-on-year basis, due to higher processing industry (10.2 percent) and extractive industry (0.2 percent). Energy production and supply, gas, heated water and air conditioning went down by 1.3 percent.
There were higher figures at the capital goods industry (14 percent), the durable goods (8.6 pc), the producer goods (6.4 pc), the non-durable goods (6.3 pc) and the energy industry (0.9 pc). The production and supply of power, gas, heated water and air conditioning went down by 0.4 percent. The resources of primary energy went up by 3.9 percent over the first five months and the electrical power resources went up compared to the same period of last year by 5.7 percent. The major primary energy resources between January and May totalled 12.9 million oil-equivalent tonnes, 490,300 more than in 2013. Over this period, the power resources were 26.2 billion KWh, 1.4 billion (5.7 pc) higher on a year-on-year basis. The increase in the power resources was due to the higher production by 1.5 billion KWh (6.3 percent).

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