The increase of the excise duty for fuels could boost the inflation rate by about 0.4 percentage points and could bring along the risk of further increases of tariffs for electric power, Romanian Commercial Bank (BCR) Chief Economist Horia Braun has said.
“We haven’t reviewed our forecast regarding the inflation rate for the end of the year, we still see it reaching 1.9%. However, the announced increase of the excise duty for fuels could boost the inflation rate by about 0.4 percentage points and there is the risk of increases in tariffs for electric power; on what we have, it seems the foodstuff prices, mainly of fruits and vegetables, could counterbalance the impact of the above mentioned inflationist issues. It remains to be seen if the fuels price increase will roll into costs, considering that transport has an important share in the foodstuff price. We anticipate 1.9% inflation rate this year, but we envisage increased risks that could boost inflation by 0.2-0.3 percentage points,” Braun said.
The National Bank of Romania (BNR) has reviewed in early August the inflation prognosis to 1.9%, up from 1.6%. For 2018 BNR anticipates an inflation rate of 3.2% and in Q1 2019 of 3.5%.
Financial analysts expect the inflation rate this year to reach 2.13% and for next year 3.3%.
Excise duties on fuels will return to the level of 2016, which included an over-excise of 7 eurocents per litre, according to a draft bill amending the Tax Code. Excise duties will increase by 22% for gasoline and by 14% for diesel fuel, according to the new levels of the Government draft bill.
Transporters have warned that the raise of excise duties will lead to more expensive transport tickets, higher transports fees for goods, to the refuse to refuel in Romania and to protests in Victoriei Square.