The central bank of Romania (BNR) forecasts an inflation rate of 9.6% by the end of this year, of which 6.3 percentage points will be the contribution of energy, and in 2023, inflation will fall to 3.2%, according to the Quarterly Inflation Report published on Friday.
In the previous Inflation Report, published in November last year, the central bank said that the annual CPI inflation rate is expected to moderate to 5.9% by the end of this year. Compared to the November Report, inflation at the end of last year was 0.7 percentage points higher and stood at 8.19%.
The document published on Friday shows that, starting in April, after the end of the period of application of the support measures provided for in the legislation, the forecast is burdened by major uncertainties associated with the dynamics of energy goods prices in the subsequent markets.
“In the first quarter of this year, the annual CPI inflation rate is forecast to be relatively stable, marginally lower than in December 2021. There will continue to be inflationary pressures in the energy segment (including in the case of fuels, given the evolution of global oil quotations) but also at the level of the adjusted CORE2 index… The assumption adopted in the baseline scenario, configured with the information available at the time of its completion, provides for the return of electricity and natural gas prices borne by domestic consumers, depending on the time of renewal of contracts, to levels that will reflect, with the expiration of support measures, the developments in energy markets, which continue to remain tense. Thus, the forecast indicates a boost in the annual rate of CPI inflation in April, followed by a gradual slowdown over the coming quarters, when smaller adjustments in energy prices are expected,” says the Quarterly Inflation Report, according to Agerpres.
A higher inflationary contribution this year also comes from fuel prices, amid recent developments in oil prices. Under these conditions, the annual rate of CPI inflation has undergone substantial upward revisions by the end of this year.
The Board of Directors of the National Bank of Romania also decided to increase the monetary policy interest rate to 2.5% per year, from 2% per year, starting with February 10, 2022.
According to the strategy consultant at the NBR, Adrian Vasilescu, the increase in the key interest rate is determined by the inflation in Romania, which is an integral part of the global inflation.