Romania’s consumer price inflation eased to 3.7% y/y in August from 4.4% y/y in July and 5.4% y/y in June, the statistics office INS reported. The overall price stabilisation was driven by a significant 3.1% decline in food prices over the past three months [Jun-Aug]. Consumer prices decreased by 0.5% over the period despite the rise in non-food prices and services’ fees.

Food prices increased by only 2.4% y/y in August, driven by abundant vegetables and fruit crops this year, while the non-food goods advanced by 5.0% y/y on adjustments of regulated energy prices, and the services’ fees increased by just 3.2% y/y remaining constrained by the subdued demand [disposable incomes] and stable exchange rate [many fees are defined in euro].

Romania’s central bank sees the end-year headline inflation at 3.1% y/y and also forecasts that the annual inflation would remain within the 1.5%-3.5% target band for the two-year horizon envisaged, its latest Quarterly Inflation Report dated August shows. It is the second consecutive downward adjustment of the forecasts issued on a quarterly basis by the central bank.