Central bank governor Mugur Isarescu said the government-announced salary increases in the public sector will likely have a smaller impact on the annual inflation than initially estimated, of around 0.2% to 0.3%.
“(The wage increase) will be offset by other elements that affect inflation. This is why we haven’t changed our prognosis for December,” Isarescu said at the presentation of the central bank’s quarterly inflation report.
He said the central bank is no longer concerned about upside pressure from food prices, as the good weather conditions this spring herald a “normal” farming output in 2012.
However, outside pressure remain, particularly from import prices and raising volatility of capital flows, Isarescu said.
He said the annual inflation is expected to stabilize around 3% in the second half of 2012, despite an adversary base effect. The central bank estimates the annual rate will range from a low of around 2% a year in May to a high of 3.8% a year in September.
Romanian annual inflation eased to an all-time low of 2.4% in March, from 2.6% a month earlier. April figures will be released this Friday.
The central bank targets an annual inflation of 3% at the end of 2012 and of 2.5% in 2013. Both targets carry a one-percentage point variation band around the target.