Romania’s end-Jun 2.85% y/y CORE2 inflation exceeds central bank’s target

By bne IntelliNews July 29, 2013

The adjusted CORE2 inflation* calculated by Romania’s central bank accelerated to 2.85% y/y at the end of June from 2.65% at the end of May, the monetary authority said. On the quarter, it decelerated however from 3.03% at end-March.

The target for end-Q2, under the latest inflation forecast issued in May, was 2.6%. The least volatile indicator of consumer price inflation thus missed the target by 25bps, threatening the end-year 2.1% y/y target.

Romania’s central bank forecasted in May that AdjCORE2 inflation would continue in Q2 the downward pattern seen in Q1 and return to the levels reached in early 2012 before the adverse shocks on food prices and the exchange rate in the middle of last year.

The central bank projected AdjCORE2 inflation to stabilise slightly above 2% on the medium term -- namely to 2.2% at the end of 2014 and as well as at the end of Q1, 2015 – which is the end of the projection interval. 

Romania’s central bank has cut its end-year inflation forecast to 3.2% y/y under the latest Quarterly Inflation Outlook released in May, down from the 3.5% y/y forecast in February. Actual inflation will come within the targeted band (2.5+/-1pps for end-2013) at an earlier moment, probably in September, the central bank said. Headline inflation accelerated in Q2 from 5.25% at the end of March to 5.37% y/y at the end of June.

* Romania’s central bank calculates the so-called adjusted CORE2 inflation, in addition to the CORE2 inflation calculated by the statistics office. The central bank subtracts from the consumer basket the tobacco and alcohol, in addition to the other goods with volatile prices [such as vegetables] considered by the statistics office.

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