Romania lowered VAT on food items to 9% from 24% in June 2015 and cut the standard rate to 20% on January 1, 2016.
“The fuel market is registering a decline in nominal terms, which has steepened in the first quarter mainly due to the drop in international oil prices. The US dollar has weakened versus the euro and the leu,” said Isarescu.
He added the European food market continues to register excess supply due to restrictions imposed on Russia.
“International currencies show a slightly increased volatility, except the leu, which has remained stable. We have not changed our policy and there was no need to intervene on the market,” said Isarescu.
Inflation remained in negative territory in the first quarter, dropping to -3% in March from -0.93% in December 2015, a lingering effect of VAT cuts. The central bank expects inflation to stay negative until July 2016, a month later than previously forecast.