The increase in excise duties on fuels, energy, restaurants, water and sewerage accelerated the increase in inflation in July of this year, according to the Special Macroeconomic Bulletin of Libra Internet Bank.

The monthly increase in consumer prices (+0.6%), the highest in the last five months, put the annual inflation on a temporary growth trajectory, it “jumped” to 5.4% in July this year, from 4, 9% in the previous month, states the quoted source. The impulse was given mainly by “fuels”, “electricity” and “natural gas”, which displayed an aggregate monthly increase of over 2%, to which were added the important monthly price increases of “water-sewer” services and those of “food” (restaurants, canteens). The price of the latter increased significantly on a monthly basis by 2% and 1.3%, respectively. Excluding the impact of price increases for the above-mentioned products and services whose aggregate weight is over 22% of the consumption basket, annual inflation would have dropped to 4.3% in July this year. The core inflation rate (adjusted CORE 2) continued to decrease in July to 5.5% (from 5.7% in June last year) but the rate of decrease was the lowest in the last six months, the authors of the Bulletin claim, according to Agerpres.

According to the bank’s estimates, the slowdown in the annual trend of core inflation in the last year (July 2023-July 2024) was supported by the food component, while services and non-food products rather generated an upward pressure.

“For the time being, we maintain the inflation forecast for the end of the year at 4.6%, given that the signals regarding the continuation of the disinflation process are still not too strong. There are a number of risks whose materialization has either been evident for some time and will continue to be so (for example, the rapid increase in the population’s incomes), or are beginning to materialize (weak domestic agricultural production, volatility of energy prices),” it is stated in the mentioned analysis.

“At the same time, relatively recent legislative changes have started to induce volatility in the price of electricity and natural gas, which adds a touch of unpredictability to the monthly trajectory of inflation. Moreover, the limited capacity of energy production at the local level accentuates the uncertainty about to the future evolution of the energy price and especially its impact on inflation, considering the large share of electricity and natural gas consumption (over 18% cumulatively). The central bank recently reduced its inflation forecast to 4 % at the end of the year, from 4.9% previously, signaling that the balance of risks to inflation is more oriented towards growth. At the same time, the BNR governor mentioned that the monetary policy is largely restrictive, considering the differential positive between the level of interest and that of inflation. This shows that the central bank remains ‘on guard’ in terms of inflation, especially in the short term,” states the analysis of Libra Internet Bank.