Romania Inflation


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

August 11, 2015

In July, consumer prices fell 0.2% over the previous month, which was a much softer drop than June’s significant 3.0% decline. According to the National Institute of Statistics (INSSE), June’s reading had represented the largest decline on record and was mainly driven by the reduction of the value-added-tax (VAT) for food items and beverages from 24% to 9% on 1 June. July’s milder decline still mainly resulted from lower food prices.

In annual terms, consumer prices declined 1.7% in July, which marked the steepest annual drop in prices on record and marked an even sharper decline than June’s 1.6% fall. As a result, in July 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 June’s 0.7% to 0.5% in July, marking yet another all-time low.

Consensus Forecast panelists see inflation at 0.2% at the end of 2015, which is down 0.1 percentage points from last month’s forecast. For 2016, panelists forecast inflation of 1.4%.

Author: Teresa Kersting, Economist

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Romania Inflation Chart

Romania Inflation July 2015

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

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