“We consider that the consumer price dynamics in the first two months of the year was impacted by the elimination of the 102 non-fiscal taxes, the general VAT rate cut from 20% to 19%, the evolutions on the local forex market and international raw material markets, and the elimination of the additional excise duty on fuel,” said Andrei Radulescu, Banca Transilvania senior economist.
Banca Transilvania analyst estimates that the annual average consumer price dynamics (EU harmonized index) will reach 1.5% in 2017 and will speed up to 2.7% in 2018 and 2.9% in 2019, respectively.
The perspectives of inflation convergence to the short-term target of the central bank, in conjunction with the re-intensification of the twin deficits and the recent signals of monetary policy on a global level, could determine the central bank to initiate a new monetary cycle in 2017.