Romania Inflation

Romania

Romania: Consumer prices in August record largest annual drop on record on reduced VAT for food items

September 10, 2015

In August, consumer prices fell 0.5% over the previous month, which was a steeper drop than July’s 0.2% decline. Consumer prices have been falling in monthly terms since June, mainly resulting from the reduction of the value-added-tax (VAT) for food items and beverages from 24% to 9% on 1 June.

In annual terms, consumer prices declined 1.9% in August, which marked the steepest annual drop in prices on record and marked an even sharper decline than July’s 1.7% fall. As a result, in August inflation moved further below the Central Bank’s tolerance margin of plus/minus 1.0% around its target of 2.5% target. Annual average inflation eased from July’s 0.5% to 0.3% in August, marking yet another all-time low.

Consensus Forecast panelists expect consumer prices to drop 0.1% at the end of 2015, which is unchanged from last month’s forecast. For 2016, panelists forecast inflation of 0.4%.


Author: Teresa Kersting, Economist

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Romania Inflation Chart


Romania Inflation August 2015

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


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