Vegetables registered the highest price hike among foodstuffs.
The annual inflation rate reached this year’s high of 5.33 per cent, significantly above the National Bank of Romania’s (BNR) target level, after prices grew by 1.18 per cent in September following a hike in the prices of foodstuffs, the National Statistics Institute (INS) announced on Wednesday. “In September 2012 the prices of foodstuffs grew by 2.3 per cent month-on-month, the prices of non-food products grew by 0.6 per cent and the prices of services grew by 0.4 per cent,” an INS communiqué shows. Vegetables registered the highest price hike among foodstuffs (+9.85 per cent compared to August), the highest price hike by far being registered by potatoes (+27.4 per cent). The price of fruits grew by 5.04 per cent, while the price of eggs grew by 7.23 per cent. In what concerns non-food products, large hikes were registered in the case of natural gas (+2.83 per cent) and fuels (+1.57 per cent). For this year the BNR forecasts an inflation rate of 3.2 per cent, the target being 3 per cent plus/minus one percentage point. In early August the Central Bank announced it maintains its inflation rate forecast at 3.2 per cent for this year and at 3 per cent in 2013, but pointed out that most risks act towards pushing the inflation rate above those levels, risks such as the international prices of raw materials and foodstuffs, the implementation of reforms, fiscal adjustment and political tensions.
Key interest rate could grow in first months of 2013
The chief economists of the main commercial banks admit that their expectations regarding the inflation rate’s growth rhythm were surpassed, forcing them to adjust upward their forecasts for the end of the year and not to rule out the possibility that the BNR could hike the monetary policy interest rate in Q1 of 2013, HotNews.ro informs. Likewise, between BCR, Raiffeisen and ING there is a consensus on the fact that the central bank will continue to strengthen control over liquidity. “The inflation rate seems to surpass the salary hike in the private sector, a hike situated at 4 – 4.5 per cent,” ING’s chief economist Vlad Muscalu stated. “While BNR could still be reticent in hiking the key interest rate, given the fact that the inflation rate is mainly determined by adverse shocks that lie outside the Central Bank’s control, we believe we could witness a strengthening of control over liquidity on the monetary market (especially considering the pressures in the sense of RON’s depreciation). We believe that BNR will hike the key interest rate only if the second-round effects of the supply-side shocks materialize and the inflationary expectations grow significantly,” Ionut Dumitru, Raiffeisen Bank’s chief economist, stated in his turn. “Weak internal demand and the government’s determination to continue the relation with the IMF after 2013, probably in the form of a flexible credit line, do not point to a hike in the monetary policy interest rate. Nevertheless, in case the population’s inflationary expectations deteriorate significantly and the second-round effects will appear, we do not rule out a gradual hike in the key interest rate in 2013. Our forecast is of RON 4.55/EUR for December 2012 and of RON 4.45/EUR for December 2013,” Eugen Sinca, analyst within Banca Comerciala Romana (BCR), stated.