The annual CPI inflation rate for the end of this year and next is forecast at 2.7% and 2.5%, respectively, according to the Inflation Report posted on the website of the National Bank of Romania.

“The estimated contribution of the change in indirect taxes is of 0.2 percentage points at the end of this year and 0.4 percentage points at the end of next year. The average annual rate of CPI inflation will continue its downward path from the first half of this year, but in a slower pace, being anticipated to reach 2.5% at the horizon of the projection, second quarter of 2022,” it is mentioned in the report.

The NBR states that, as the epidemic situation normalizes and the agents’ behavior gradually adapts to the new conditions, the inflationary pressures associated with the medical situation will gradually diminish. In this context, the disinflationary effect of aggregate demand is expected to become dominant in the medium term, leading to a decrease in the annual rate of core inflation, followed by its stabilization, starting in the middle of next year, at around 2.2%. The relatively low dynamics of import prices also contribute to this evolution. Thus, inflation excluding energy products from the euro area is on a gradually declining trajectory until the end of next year, followed by a slow recovery at the end of the forecast period. Inflationary expectations remain within the target range until the projection horizon, the decrease during the current year being followed by a relative stabilization, according to Agerpres.

For next year, the value is relatively similar to that projected in the May Report.

The trajectory of administered prices provides for increases of 1% and 2.5% at the end of the current year and, respectively, of the next year. Compared to the May Report, the projection for the end of 2020 has been adjusted downwards by 1.1 percentage points, amid the July reduction in regulated electricity tariffs applied by suppliers of last resort, while for the next year its level is estimated to keep a similar trend.