Inflation

The National Institute of Statistics (INS) yesterday published the November inflation rate at 0.93 percent, with an increase in prices pushing annual inflation to 6.67 percent, higher than the 5.7 percent forecast for 2007 by BNR.
After several years of continuing disinflation in Romania, the year 2007 falls outside this context, with analysts expecting inflation to reach 7 percent.

An increase in salaries and pensions in 2008 raises the risk of inflation, leading analysts to speak of a high of 7.5 percent in annual inflation rate in the first half of the year. “We are expecting 7.4 percent inflation in the first half of 2008, on the basis of an increase in food prices until the new harvests begin. Furthermore, bad news regarding a raise in the minimum salary to 500 lei, and to 540 lei in the second half of the year, as well as of pensions in 2008, are not at all to the liking of the National Bank,” according to a statement to Business Standard by Ionut Dumitru, Chief of Macroeconomic Research Department of Raiffeisen Bank Romania. Erste Bank experts have indicated that Romania will registere inflation of 6.1 percent in 2007, while 2008 will see inflation worth 4.8, exceeding BNR’s recent prognosis of 4.3 percent.

The government and BRN had set inflation for this year at 4 percent, with a variable of 1 percentage point +/-. The inflation target set by the two institutions for 2008 is 3.8 percent, +/- 1 percentage point.