The inflation rate in March was 0.04 per cent compared to February, after a rise of service tariffs and slight decrease of the prices of food and non-food goods, taking the annual rate to 5.25 per cent, according to a National Statistics Institute (INS) press release. In March, the price of food and non-food goods decrease by 0.1 per cent compared to the previous month and the tariffs of services went up by 0.5 per cent. In the food category, the most important price decrease was registered for eggs, by almost 10 per cent, and the biggest price rise – 1.2 per cent was registered for beer. In what regards services, the evolution of tariffs was influenced by a 4 per cent decrease in the railway transport. In the first three months of the year, the highest price rise was registered for vegetables – by over 11 per cent, especially potatoes – 13.64 per cent, beans – 6.80 per cent, fresh fruits – 5.94 per cent.
On the other hand, the most important price decrease was seen in eggs – 14.43 per cent, cooking oil – 1.73 per cent and sugar – 0.89 per cent. ‘We see high prices first of all because this 24 per cent VAT. The measure taken by the previous government was completely unreasonable, with a poor people. Secondly, the weather is also to blame, as it has been very adverse in this period, delaying the appearance of vegetables grown in local greenhouses on the market’, the President of the Federation of Trade Unions in the Food Industry, Dragos Frumosu, explained on Digi24 TV. He also noted that, under such conditions, small producers should pool their resources in strong associations in their areas. ‘The overall average price rise in the last 12 months (April 2012 to March 2013) compared to the previous 12 months (April 2011 to March 2012), calculated based on the CPI, was by 4.1 per cent and the one calculated using the harmonised consumer price index (HCPI) by 3.9 per cent’, INS says in its release. In February, consumer prices had stalled at 0.34 per cent rise compared to 1.3 per cent in the first month of the year. BNR’s inflation rate projection this year is 3.5 per cent, with a target of 2.5 per cent plus/minus one percentage point.
The central bank anticipates an inflation rate of 5-6 per cent in the first half of the year with a subsequent decrease, but the level will considerably depend on the evolution of volatile prices such as those in agriculture.
Vasilescu, BNR: March – the ideal picture
The slower price rise last month is appreciated by central bank officials. On a long term, however, BNR officials expect prices to go up. ‘March shows the ideal picture we would like to see every month. The overall rise was 0.04 per cent. We have disinflation and we see declining prices in January, February and March. The National Bank forecast 6 per cent price rise in the first part of this year’, BNR governor’s adviser Adrian Vasilescu told Digi24 TV.
Analysts alert to fast service price rise
The evolution of the consumer price index (CPI) has been better than expected, especially that, in March, the national currency depreciated by an average of 0.15 per cent against the euro and 3.2 per cent compared to the US dollar and we anticipated a monthly CPI of 0.2 per cent, Volksbank Romania Chief Economist Melania Hancila told HotNews.ro. With the depreciation of the local currency having a major impact on inflation and water, sewerage and municipal waste collection continuing to go up by 1.9 per cent month-on-month in April and the evolution of consumer prices in the first months of the year being affected by the poor agriculture performance the previous year, the inflation stagnation was due to the persistence of the aggregated demand deficit. ‘The pace of growth of water, sewerage and waste collection tariffs is concerning – 120 per cent since 2007 – although, all this time, neither the living standard nor salaries have grown, which means one should look into the rationale for operating such tariff increases, especially when you have a captive population unable to change providers’, the Volksbank Romania official further said.