BNR increases inflation forecast to 16.3% for the end of this year

The National Bank of Romania (BNR) increased the inflation forecast for the end of this year to 16.3% and estimates an inflation of 11.2% for the end of next year, according to the data presented on Monday by the governor of the BNR, Mugur Isărescu.

In August 2022, the BNR estimated inflation of 13.9% for the end of the year and 7.5% for 2023. Also, in May 2022, the central bank anticipated inflation of 12.5% ​​for the end of this year and 6.7% for next year.

According to the central bank, the annual CPI inflation rate is projected to follow a slightly upward trajectory until the end of next year, and then to correct itself assuming the gradual dissipation of both supply shocks and aggregate demand pressures. In the base scenario, the downward trend will be temporarily interrupted in the third quarter of 2023, with the coming into force of the price ceiling measures for energy goods, with an impact on the annual CPI inflation rate for 4 quarters. Subsequently, at the end of the third quarter of 2024, the convergence towards the inflation target is expected to be rapid, with extremely favorable base effects as the main source.

At the same time, BNR Governor Mugur Isărescu sent a warning on Monday regarding energy prices. “It’s no joke,” says the central bank chief, noting that hikes in natural gas and electricity rates quickly create a ripple effect.

“More effects of the increase in energy prices, crude oil on other products, I expressed to you at the beginning of the year. Energy prices are no joke, because they quickly lead to other prices, are the quasi-permanent component in almost all costs. If we look at recent months, inflation has hovered between 14 and 16 percent. And monthly increases have hovered between 1 and 1.3 percent, compared to the big increase in April, a plateau which we can see better if we redo the chart. To the settlement of consumer price index inflation, an important contribution was made by the stable evolution of the electricity and gas component and a disinflationary influence of the fuel group,” said Isărescu.

BNRCPIenergy pricesgasgovernorhikesinflationMugur IsarescuNational Bank of Romaniaripple effect
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