Romania’s annual inflation rate climbed to 3.8% in November 2019 from 3.4% in October, driven by higher food prices. Food prices grew 4.9% on the year in November, prices of non-food items were 2.8% higher, and service prices grew 4.1%, data from the country’s statistics board showed Wednesday. Since the beginning of 2019, the highest price increases were recorded by potatoes (20.6%), citrus (18.9%), fruit and canned fruit (15.9%), while prices of natural gas and eggs and fell nearly 5% and over 1%, respectively, the same data showed Wednesday.
“Statistics point to the acceleration of the annual dynamics (towards the highest level since August), an evolution impacted by the reduction of the agricultural production and the depreciation of the national currency, in a context marked by a positive climate involving consumption, bolstered by salary increases and the acceleration of lending”, stated Andrei Radulescu, macroeconomic analysis director with Banca Transilvania (BT).
On a short and medium term, Banca Transilvania keeps its previous forecasts for the evolution of consumer prices: annual average rates of 3.9% in 2019, a deceleration from 4.1% in 2018, and 2.9% in 2020 and 3.3% in 2021, respectively.
Romania’s central bank has lowered its year-end inflation forecast to 3.8% for 2019, from a previous forecast of 4.2%. The 2020 inflation forecast was also lowered to 3.1% from a previous projection of 3.4%. The central bank expects annual inflation will remain outside the central bank’s target variation band of 1.5%-3.5% throughout the rest of 2019 due to unfavorable shocks in the first half of the year and is then seen stabilizing around the upper band of the target.