Annual inflation rate decreased to 15.52 percent in February 2023, from 16.37 percent in December 2022, relatively in line with forecasts, the National Bank of Romania (BNR) announces. The decrease was mainly determined by the large decrease in the dynamics of fuel and electricity prices, under the influence of consistent base effects and the change from January 1, 2023 to the features of the energy price capping and compensation scheme.

Thus, the BNR decided to maintain the monetary policy interest rate at the level of 7.00 percent per year.

“Economic growth slowed down only slightly in the fourth quarter of 2022, to 1.0 percent, from 1.2 percent in the previous three months (quarterly variation), thus once again exceeding expectations, a development that makes it likely that the aggregate demand surplus will increase and in this interval, contrary to expectations. Compared to the same period of the previous year, the economy accelerated its growth to 4.6 percent in the fourth quarter of 2022, from 3.8 percent in the previous interval,” say BNR officials.

“The national currency continued to show an appreciation trend against the euro in this interval, in the context of the high relative attractiveness of investments in lei, so that in the last days of March, the leu/euro ratio gradually increased, returning to the proximity of the prevailing values in the first semester of 2022,” says BNR.

According to current assessments, the annual rate of inflation is likely to accelerate its decline in the coming months in line with the latest medium-term forecast (February 2023), under the influence of strong base effects and downward corrections in some commodity prices, as well as the background to the change in the characteristics of energy price capping and compensation schemes.

“Uncertainties are, however, associated with the presumed impact of the new configuration of energy price capping and compensation schemes, and the balance of risks induced by factors on the supply side tilts slightly upwards in the current situation, given including the shortage of vegetables in Europe and the reduction oil supplies announced by OPEC countries.”

Autor: Bogdan Tudorache

Active in the economic and business press for the past 26 years, Bogdan graduated Law and then attended intensive courses in Economics and Business English. He went up to the position of editor-in-chief since 2006 and has provided management and editorial policy for numerous economic publications dedicated especially to the community of foreign investors in Romania. From 2003 to 2013 he was active mainly in the financial-banking sector. He started freelancing for Energynomics in 2013, notable for his advanced knowledge of markets, business communities and a mature editorial style, both in Romanian and English.