Romania’s central bank lowers inflation forecast to 3.5 pct at end-2018, 2.7 pct in December 2019

The National Bank of Romania (BNR) has revised downward the inflation forecast for the end of 2018 from 3.6 to 3.5 percent, the central bank’s governor, Mugur Isarescu, said on Wednesday.

For the end of 2019, BNR’s inflation estimate was lowered from 3 percent to 2.7 percent.

“The inflation rate will remain within the target range from the end of 2018 until the end of 2019,” Isarescu said.

Romania’s central bank shifted to direct inflation targeting since August 2005, following the ECB model. The current inflation target is 2.5 percent +/- 1 percentage point (1.5 – 3.5 percent).

Romania’s annual inflation rate remained flat at 5.4 percent in June, a 5-year high, as the summer food price effect calmed down consumer prices, recent National Institute of Statistics (INS) data show.

Compared with the same month of last year, the prices of food products rose by 3.9 percent on average, while non-food products increased by 7.8 percent. The prices of services went up by 2.6 percent.

In a recent speech, Isarescu said that the changes in indirect taxation and regulated utility prices in Romania have played a significant role in the recent inflationary spell.