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.