BNR revises upwards the inflation forecast at 1.9pc

BNR revises upwards the inflation forecast at 1.9pc

BNR Governor: Reintroducing the over-excise duty will push inflation up

The National Bank of Romania (BNR) has revised the inflation forecast for the end of this year to 1.9%, central bank Governor Mugur Isarescu said on Tuesday, considering that he previously estimated an inflation rate of 1.6%, down by 0.1 percentage points.

For the end of 2018, BNR estimates an inflation rate of 3.2%, against 3.1% previously, and for the end of the first half of 2019, an inflation rate of 3.5% is expected.

According to the Romania’s central bank officials, the reintroduction of the annual CPI inflation rate within the target range is expected to take place in the third quarter of 2017.

Calculated at constant rates, the inflation rate will reach 2.9% in December 2017, a value above the central inflation target of 2.5%.

At the press conference on inflation on Tuesday, the central bank Governor Mugur Isarescu has said that fewer prices are going down, whereas more prices go upwards.

“The pressures on inflation come from the tax policy as well as from administrative prices, mainly in energy. There are pressures from the labour market, but also from imports, as their prices are not going down. The labour costs and the raw materials costs are on an upward trend,” the BNR Governor said, according to

Asked how the Finance Ministry’s intention to reinforce the over-excise on fuels will influence the inflation, Isarescu said: “It will affect us, will push the inflation up! We didn’t include the raise in the inflation forecast, it was only discussed. The risk, as you’ve seen, comes mainly from the tax policy and the administrative prices.”

Mugur Isarescu added that the trend is coming from the food prices, whereas the energy prices have reversed the trend in the third quarter, from decrease to increase. Some influence came also from the political tensions in June, which influenced the exchange rate.”

Referring to the household consumption as the driving engine of economic growth, Isarescu pointed to the fact that ‘unfortunately’ the consumption is stimulated by crediting. “The loans are going strongly ahead, both for consumption and for housing. The loans for corporations are going much slower unfortunately, up by only 2%. We would like to witness an ampler crediting to companies, more courage coming from the banks,” the BNR chief said.

Excise duties on fuels will return to the level of 2016, which included an over-excise of 7 eurocents per litre, according to a draft bill amending the Tax Code. Excises will increase by 22% for gasoline and by 14% for diesel fuel, according to the new levels of the Government draft bill./IBNA