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July 31, 2021

Annual inflation rate drops to 4.56 pc in November

The banks’ chief economists admit that in November the inflation rate dropped at a pace that exceeded market forecasts and confirm BNR’s end-of-year inflation rate forecast with slight differences.

The annual inflation rate reached 4.56 per cent after consumer prices grew by just 0.04 per cent in November, being influenced by the price drops registered by non-food merchandises and services, the National Statistics Institute (INS) data published yesterday shows. “In November 2012 the prices of foodstuffs grew by 0.3 per cent month-on-month, while the prices of non-food merchandise and services dropped by 0.1 per cent,” the INS communiqué shows. Among foodstuffs, eggs registered the highest price hike (+8.7 per cent), while fruits and canned fruits registered the steepest price drop (-1.6 per cent). Fuels registered a similar price drop (-1.5 per cent). When it comes to services, the prices of rent, airline tickets, phone and cable subscriptions dropped by less than 1 per cent. “The average price hike in the last 12 months (December 2011 – November 2012) compared to the previous 12 months (December 2010 – November 2011) stands at 3.2 per cent when calculated on the basis of the ICP, and at 3.3 per cent when calculated on the basis of the harmonized index of consumer prices (HICP),” the communiqué points out. The annual inflation rate returned below 5 per cent in October, when consumer prices grew by just 0.29 per cent compared to 1.18 per cent in September, the annual inflation rate reaching this year’s high of 5.33 per cent at that time.The National Bank of Romania (BNR) has revised upwards by 1.9 per cent its inflation rate forecast for this year, from 3.2 per cent to 5.1 per cent, 1 percentage point above the upper limit of the targeted interval, and hiked its forecast for 2013 from 3 per cent to 3.5 per cent. This year BNR seeks to fall within a 2-4 per cent interval, and to enter a 1.5 – 3.5 per cent interval next year.

Below expectations

Consumer prices were flat in November (+0.04 per cent month-on-month), while Raiffeisen Bank analysts’ expectations and market consensus were for an increase of 0.4 per cent month-on-month. “The annual inflation rate would probably be close to 4.7 per cent year-on-year in December, while it would remain close to 5 per cent year-on-year in H1 of 2013. This would be better than we, the market, and the central bank expected only one month ago (inflation close to 5.5 per cent year-on-year). Lower than expected inflation should mitigate the upward pressure on money market interest rates and yields for Treasury securities,” according to a Raiffeisen Bank analysis released yesterday.“The inflation rate data positively surprised us because we were estimating an annual inflation rate of 4.7 – 4.8 per cent and the surprise comes from the hike in foodstuff prices which was more modest than we anticipated. The stagnation of the consumer price growth rate (just 0.04 month-on-month) in November represents an absolute record for Romania, because in the last two months of the year the inflation rate usually stands at a high level because of the seasonal effect on foodstuff prices, which, given their high share in the consumer basket (37.2 per cent) compared to the European average, has a strong effect on the inflation rate. (…) We expect the annual inflation rate to surpass the 5 per cent level in January and to remain around that level in the first two quarters of 2013 because of an unfavorable base effect,” Melania Hancila, Volksbank Romania’s Head of Research & Strategy Department, stated for Hotnews.ro.“Similarly to the October data, the details of the report are not that good. CORE2 remained unchanged at 3.3 per cent because the volatile foodstuff prices dropped month-on-month while the prices of processed foodstuffs continued to rise. The inflation rate will probably climb to 5.1 per cent at the end of the year, BNR estimate. Inflationary preoccupations are probably playing a smaller role than the management of liquidity in what concerns the central bank’s preoccupations but the natural link between the two is confused by the non-transparent way in which the management of liquidity is being done,” ING Bank senior economist Vlad Muscalu stated is turn.

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