Romania: Annual drop in consumer prices deepens in July
August 10, 2016
In July, consumer prices dropped 0.2% over the previous month, which is in line with June’s reading. July’s result mainly reflected lower prices for non-food products, which more than offset higher prices for goods and services.
In annual terms, consumer prices recorded a 0.8% drop in July, which came in slightly below the 0.7% decline registered in June. Consumer prices had been following a downward trajectory since June 2015, mainly due to the reduction of the Value-added Tax (VAT) on food items and beverages that was implemented in June 2016 and a cut in the general VAT that has kept inflationary pressures muted. Inflation remains far below the Central Bank’s tolerance margin of plus/minus 1.0% around its 2.5% target. The annual average variation of consumer prices inched up from minus 2.0% to minus 1.9%.
Author: Christopher Mc Innes, Economist