Romania’s inflation rate goes down to -2.7 in February 2016

Newsroom 11/03/2016 | 17:04

Romania’s inflation rate went down to -2.7 percent in February 2016 after ending 2015 at -0.9 percent, according to the National Institute for Statistics.

The monthly average inflation rate for the first two months of 2016 was -0.5, compared to 0.4 for the same period in 2015. Furthermore, according to the consumer price index (CPI) prices went down in February 2016 by 0.24 percent compared to January 2016.

The weight of goods and services for which a price fall was observed was 59.3 percent year-on-year, further adds INS. In terms of prices that went up, the weight of the goods and services whose prices increased by 0-2.5 percent was 24.1 percent, while the weight of those goods and services for which prices increased by more than 2.5 percent was 16.6 percent.

In an analysis sent to Business Review, Ciprian Dascalu, Chief Economist with ING Romania, said that the -2.7 rate surprised “both our forecast (-2.0 percent) and market consensus (-2.7 percent)”. He further added that “the main error on our part came from food prices, mainly vegetables, but also from some utility prices declining (heating, sanitation, water), as well as much lower phone bills.”

Nevertheless, “despite the record-low headline, underlying inflationary pressures are the strongest they have been in years” and “inflation excluding tax cuts is already above the central bank’s stationary inflation target of 2.5 percent, leading us to still expect a tightening in monetary policy towards the of the third quarter of 2016 or in the fourth quarter of 2016,” added Dascalu.

At the end of February, BNR governor Mugur Isarescu said that inflationary pressures might mean tighter policy sooner for Romania following the fall of 2.1 percent in consumer prices in January.

Andreea Tint

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