Central Bank could increase forecast inflation

According to data announced by the National Statistics Institute, the biggest price increases were in food, vegetables first: almost 10 percent, in addition to August.

Central Bank governor’s counselor, Adrian Vasilescu, believes that, given the new conditions, full-year inflation rate could double.

The annual inflation in September exceeded the level of 5 percent, mainly due to price rising of food.

Analysts had expected an increase in the second half of the year, but it has surprised through its amplitude, a value exceeding 5 percent is already a very large leap, especially considering the fact that by the end of the year there are some important prices to grow, for instance, the heating or energy products, appreciates the economic analyst, Aurelian Dochia.

"No doubt that the quantum number for 2012 will be more off the National Bank target and will pose serious challenges for everyone. Firstly, the consumers, who will obviously see their purchasing power reduced.

"Secondly, the manufacturers, the economic operators who find themselves again in an environment of greater uncertainty, but also for the government and for the administration, because the 2013 budget will have to be built in completely different conditions than those envisaged by now. So, there are many changes that will have a significant impact", says the analyst Aurelian Dochia.

The upward trend of inflation "will moderate"

Counselor Adrian Vasilescu says that he predicts a figure close to 5 percent for the annual inflation from September and that the central bank does not change its target over time, depending on the changing economic conditions.

He believes that the upward trend in inflation will moderate in the coming months.

"Perhaps the inflation will not rise much above this level. It might in October to see even a slight rebound, but, at the mean time, the shock has occurred. Henceforth, there will be slow growths. I believe that this year we will conclude with an inflation between 5 and 6”, says the BNR governor adviser, Adrian Vasilescu.

The head economists of some of the leading commercial banks in Romania consider, in an analysis made by Hotnews, the BNR will continue to strengthen the control of liquidity in the market, but at the same time they do not exclude the possibility that the central bank to increase the interest rate of the monetary policy in the first half of next year, but only if Romanians’ expectations regarding the inflation would inflamed, and would show second-round effects of rising prices in the economy.


Translated by Alexandra-Diana Mircea
MTTLC, Bucharest University