The National Bank of Romania (BNR) forecast for this year show an accelerated pace of price growth, i.e. 3.2% in December 2018 and 2.7% in December 2017, central bank Governor Mugur Isarescu has said on Thursday, during the presentation of the Inflation Report.
The previous forecast pointed to 1.9% inflation rate in 2017.
“The exceeding of the upper limit of the inflation target in the first part of 2018 is due mainly to the statistical effects associated to tax cuts at the beginning of 2017, due to the expected development and also to the accumulation of inflationary pressures. Calculated on the basis of steady taxes, the annual inflation rate will reach 3.3% at the end of this year, 3.1% at the end of next year and 2.9% at the end of projection. It’s hard to see it through when there are so many tax cuts, to put them aside and see what level will the inflation reach,” Isarescu said.
Trying to explain the current trend, the BNR Governor said: “We are facing pressures for RON’s depreciation, as the Hungarians and Poles face, the only currency in the region to register an appreciation is the Czech Krona. The trend is associated to the balance of payments. We have higher imports than exports, whereas the imports growth speed is higher than the one of exports. Although this deficit is partially covered by capital and European funds inflows, there is a problem,” Mugur Isarescu said.