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Bucharest
October 1, 2020
ECONOMY FINANCE&BANKING

Inflation rate remains very low

+ Central Bank’s inflation rate forecast pointing upwards

 

In January, Romania registered the second lowest negative inflation rate among the 28 EU member states, -1.5 per cent, double the level registered in December 2015 (-0.7 per cent), the Eurostat data published on Thursday show.

According to the aforementioned source, in January the annual inflation rate remained stable at 0.2 per cent in the European Union, and grew to 0.3 per cent in the Euro Area (from 0.2 per cent in December). Ten member states registered negative annual inflation rates, the list being topped by Poland (-1.7 per cent) and Romania (-1.5 per cent). At the opposite end, the highest annual inflation rates were registered in Belgium (1.8 per cent), Austria (1.4 per cent) and Sweden (1.3 per cent).

Compared to December 2015, the annual inflation rate dropped in 12 member states, including Romania, remained stable in two countries and grew in 14 others. In the Euro Area, the most significant price hikes were registered in the case of restaurants and cafes (up by 0.10 percentage points), cigarettes and fruits (each 0.06 percentage points). On the other hand, the most significant negative impact on the inflation rate came from transport fuel (-0.28 percentage points), heating fuel (-0.18 percentage points) and natural gas (-0.11 percentage points).

The European Central Bank is staking on an inflation rate below 2 per cent. However, in the Euro Area the inflation rate fell below that target ever since early 2013, and last year it even went into negative territory, against the backdrop in which oil prices fell significantly.

In what concerns Romania, the National Statistics Institute (INS) data shows that the consumer price index stood at -2.1 per cent in January 2016 compared to January 2015.

Nevertheless, BNR revised to 1.4 per cent its inflation rate prognosis for the end of this year, up by 0.3 percentage points compared to the previous prognosis (1.1 per cent). Likewise, National Bank of Romania (BNR) Governor Mugur Isarescu recently stated that he is expecting a tightening of the monetary policy earlier than previously expected, bearing in mind that inflation has returned.

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