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BNR maintains inflation forecast at 3.5% for 2018, expects 2.9% in 2019

The National Bank of Romania (BNR) has maintained the inflation forecast for this year at 3.5% and has increased the level of expectations to 2.9% for 2019, up from 2.7%, Governor Mugur Israescu has announced on Thursday, on presenting the quarterly report on inflation.

“Our forecast is that in the following months the inflation will continue the downward trend and a considerable decrease of the inflation rate towards the upper limit of the interval, towards 3.5%. These are our figures and we believe in them, with the involved risks,” Mugur Isarescu said.

According to the figures released on October 10 by the National Statistics Institute (INS), the annual inflation rate in September decreased slightly to 5.02%, down from 5.1% in August, given that the non-food goods prices increased by 6.55% and the foodstuff prices by 4.44%, whereas the prices of services increased by 2.54%.

The average monthly inflation rate in the first nine months of this year was of 0.3%, higher than 0.1% in the similar period last year.

“The prices for foodstuff have a large share and high variants in Romania, this is why they have a major impact on inflation,” Mugur Isarescu said on Thursday.

The BNR Governor said the inflation outlook could be influenced mostly, in the coming period, by the developments regarding the crude oil price, which is heading towards USD 70 per barrel. The influence of the international prices of oil on domestic fuel prices is almost immediate, Isarescu added.

“Over long term, we anticipate the inflation rate in Romania will not fall below 2%.” Isarescu also said.

The central bank Governor argues that, with no decrease in the VAT level, which brings lower inflation over short-term, the Romanian economy will be one ‘to catch up the other ones’.

“Such an economy registers higher inflation. It’s confirmed by theory,” Mugur Isarescu said.

 

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