The annual inflation rate will continue to rise until October

The annual inflation rate will continue to rise until the middle of the third quarter, but will visibly slow down. The statement was made by the NBR (National Bank of Romania) governor, Mugur Isarescu, after the Board of Directors of the National Bank increased the key interest rate by one percentage point, up to 4.75% per year.

He outlined the main causes that will drive inflation to rise in the short term:

"Determinants of this worsening outlook for inflation are the higher dynamics expected to be recorded in the coming months by the prices of fuels, natural gas and electricity, even in the context of the application of support schemes and the manifestation of basic effects; same goes for the prices of processed foods, mainly under the influence of the stronger rise in the prices of crude oil, energy products and agri-food goods, amid the war in Ukraine and associated sanctions. Additional inflationary effects are expected on the administered prices segment, including as a result of the increase in CFR tickets, as well as on tobacco products, because of the specific excise tax increase", said Mugur Isarescu.

The main uncertainties come from the quotation of energy products and the blockages in the supply chains, against the background of the war in Ukraine, Mugur Isarescu also mentioned.

Translated by: Radu Matei