Romania Inflation May 2016


Annual consumer prices tumbles to a new all-time low in May

In May, consumer prices rose 0.3% over the previous month, which contrasted the 0.2% decrease tallied in April and marked the highest reading in six months. May’s result mainly reflected a broad-based price increase in all three components of the index with the food products component tallying the biggest increase. Consumer prices had been following a downward trajectory since June 2015, mainly resulting from the reduction of the value added tax (VAT) for food items and beverages since June and a cut in the general VAT that has kept inflationary pressures muted.

In annual terms, consumer prices recorded a sharp 3.5% drop in May, which marked the largest fall on record (April: -3.3% year-on-year). As a result, inflation moved further below the Central Bank’s tolerance margin of plus/minus 1.0% around its 2.5% target. On average, consumer prices fell 2.1% in annual terms in May (April: -1.7% yoy), marking yet another record low.

FocusEconomics Consensus Forecast panelists see consumer prices falling 0.4% on average in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, panelists expect average inflation of 2.4%.

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Romania Inflation Chart

Romania Inflation May 2016

Note: Year-on-year and month-on-month variation of consumer price index in %.
Source: National Institute of Statistics.

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