Romania’s central bank revises inflation forecast to 1.8% in 2013

The National Bank of Romania has revised the inflation forecast for this year from 3.1 per cent down to 1.8 per cent, and the figure for next year has been cut from 3.1 per cent to per cent. The central bank expects the inflation rate to reach a new low in the first half of 2014.

Showing moderation, central bank governor Mugur Isarescu said: “Just as we didn’t panic last summer, when the annual inflation rate skyrocketed as a result of drought and the political situation, we will neither jump for joy now that the annual inflation rate will see an all-time low and will continue to drop”.

The impact of the new fiscal measures on price increases will amount to between 0.2 percentage points and 0.6 percentage points, Isarescu said.

“Usually, these taxes are included in the costs and will or will not be reflected in the final price. It also depends on the market. I would like to make one thing clear, though, namely that we don’t believe that any decision to increase costs through taxes is automatically reflected in the prices, as in a snowball effect. This idea has been disproven by practice. The market does not absorb everything in the prices. There is no reason to expect a snowball effect,” he said.

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(Photo: svilen001/