“With wages set for another breakout this year, especially those in the public sector (which currently employs around 25% of Romanian jobholders), inflation is pretty likely to head towards 2% or even more in the first quarter of 2017,” Erste Group said in a statement.
According to Erste analysts, the central bank may decide to start hiking the key rate in late 2016 in a bid to counter an unwanted runaway in prices.
Central bank governor Mugur Isarescu has recently acknowledged that private consumption is already being overstimulated.
As 2016 is an election year, new salary hikes could be decided, as governments, irrespective of their political hue, show a marked bias towards wage hikes and welfare spending, which are also fueling private consumption.
Romanian consumer prices rose 0.11% in December compared with November, taking the annual inflation rate to -0.9%, the country’s statistics institute said Wednesday.
Compared with November, Romanians paid 0.24% more for food items in December, 0.4% more for services, and 0.1% less for non-food items.
Compared with December 2014, food prices dropped 6.2%, while non-food prices grew 1.95%, and service prices grew 2.4%, the data showed.