Extra pressures on inflation in 2008

The price of imported natural gas, which makes up for some 40 percent of domestic consumption, could increase by 15-16 percent as of 1 January, affecting mostly the population.

Finance Minister Varujan Vosganian had said that the average rise in prices paid by the population for electricity and natural gas will be lower than inflation.
However, pressures caused by salary rises in an election year (local and general elections are to be organized in 2008) higher food prices, and an increase in oil quotations, combined with energy price rises, are likely to impact on inflation. The central bank's inflation target for 2008 is 3.8 percent, +/- one percentage point, while the inflation prognosis is 4.3 percent. Several analysts say that inflation could be almost double, especially in the first half of next year. “We are expecting a rate of 7.4 percent inflation in the first half of 2007, as food prices are to continue rising, before the harvest of new crops," said the head of Raiffeisen Bank Romania’s Macroeconomic Research Department, Ionut Dumitru.