The National Bank of Romania (BNR) revised upwards to 3.5 percent the inflation forecast for the end of 2018, central bank governor Mugur Isarescu said on Friday in a press conference.
The previous forecast indicates an inflation of 3.2 percent this year. For end-2019, BNR estimates an inflation rate of 3.1 percent.
According to BNR, the acceleration of the annual inflation rate in the first three quarters of 2018 is due to those components of the consumer basket exogenous to the monetary policy sphere. The depletion of this inflationary spurt has the effect of reinserting the indicator in the target range from the last quarter of 2018
”Trade deficit concerns us very much. It grew up where we think we have potential – food and agri-food products. What amazed me is that Romania imports many apples. We own 14 percent of the area on which apples are grown in the European Union, but we only deliver 3 percent of the production,” Isarescu stated.
He noted that the competitiveness indices of the food industry are low, yields are also low and production capacities are under-utilized.
According to the BNR governor, administered prices will have the biggest share in rising inflation for 2018 and 2019. Also, rising inflation risks higher than we expected come from fiscal revenue policy and labor market tensions.
Last but not least, he once again pointed out that Romania had the most galloping price increase in Europe and that a new wave of price hikes will follow until Easter.