Romania’s headline inflation remains subdued

Romania’s headline inflation remains subdued
By Iulian Ernst in Bucharest October 12, 2016

Romania’s consumer price inflation fell to minus 0.6% y/y in September from minus 0.2% y/y in August, in an unexpected deflationary move that further deferred expectations of monetary tightening. HICP inflation returned to negative territory, at minus 0.1% y/y in September, after the 0.3% y/y reading one month earlier – the first positive value in the past 15 months.

The Romanian central bank announced on August 8 it had significantly revised downwards its yearend inflation projection for this year, by 1pp to minus 0.4%. The outlook for next year was also cut, by 0.7pp to 2%. Annual inflation will remain in negative territory until the end of this year, and below the 2.5% target until the end of 2017, reaching 3% in the second quarter of 2018, according to the central bank.

Food prices increased by less than 0.5% y/y in September, while prices of non-food goods and services fees contracted by more than 1% y/y.

The modest increase was particularly unexpected for food prices, which grew by nearly 2% y/y in August after the base effects of the VAT rate cut last June (from 24% to 9%) vanished. However, the prices of vegetables dropped by 5.5% m/m in September, in a move that did not follow the usual seasonal pattern. Fruit prices also decreased by 2.6% m/m.

The central bank’s baseline scenario envisages faster economic growth this year than in 2015. Growth should slow down in the course of 2017, reflecting, among other factors, a deceleration in GDP growth among Romania’s main trading partners, against the background of the fallout from the Brexit referendum. Consumption and, to a smaller extent, investment will be the main drivers of brisk GDP growth.

Data

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss