The considerable price increase, especially for foodstuffs, leads financial analysts to believe the 3.9 percent inflation, forecast by Romania’s National Bank (BNR), will be exceeded. “We will review the forecasts for a 4.6 percent inflation rate for this year, but if utility prices increase further, the inflation target is in danger. The rise of these prices, as well as those of fruits and vegetables, might generate a 5.3 percent inflation rate for 2007,” said the head of Raiffeisen Bank’s Macroeconomic Research department, Ionut Dumitru,. The 1.68 percent increase in foodstuffs’ prices, 1.06 percent in services tariffs, and 1.07 percent for cars and spare parts determined a spectacular increase of the consumer price index.
Raising the price of bread by three percent alone brought a 0.3 percent contribution to August’s inflation, according to Dumitru. The anticipated evolution in consumer prices, given Romania is going through the most severe drought in the last 50 years, indicates higher rates of inflation growth for Q4 of 2007. “By the end of the year, monthly inflation will be worth one percent, with November bringing the highest consumer prices. For the end of the year, the 4.7 percent estimation stands,” BRD-SG’s chief analyst, Florian Libocor, said.
Although BNR officials are still optimistic about keeping the inflation rate between the 3-5 percent as initially assessed, they do not rule out the possibility of topping the 3.9 percent inflation target. “It’s impossible to rule out a four percent inflation rate for 2007,” BNR’s chief economist, Valentin Lazea, told Business Standard.
