National Bank of Romania expanded inflation forecast for 2011

On Thursday, Mugur Isărescu, Governor of the National Bank of Romania, announced that National Bank of Romania forecasted that the inflation rate would increase from 3.6 percent to 5.1 per cent, in 2011 and from 3.2 percent to 3.6 per cent, in 2012.

‘The forecast for the end of this year does not include the growth of electric power price about which we thought would be done in autumn. As for the fuel, its price may increase but not too much. Next year, not only tobacco products price but also alcohol, vegetables and fruit prices will decrease’, Mugur Isărescu said during a conference where he presented the inflation report.

The Governor added that the press release transmitted two days ago by the National Bank of Romania which was revealing that the annual inflation rate will be boosting by this summer, doesn’t imply that the National Bank expects an emphasis on price increases, too.

He explained that the increase of the annual inflation rate is due not only to the negative basic effect but also to relating the monthly increases of the first quarter of the year to those from last year which were much lower.

‘The risk of departing from the inflation target is increasing. There is coming up 2012 elections year and there is a temptation or pressure to ease the program of fiscal stabilization’, Mugur Isărescu said.

The Governor of the National Bank of Romania added that the bank will keep on monitoring the market and will not change its attitude regarding its monetary policy.

‘We did not ease our monetary policy and we did not give in the avalanche of interpretations when the inflation threatened us because this would have meant to decrease both the reference interest and the monetary policy interest. The interest is very helpful for us in the future. As a consequence, we kept the monetary policy rate at 6.25 per cent’, Mugur Isărescu added.

Romania registered the second local food prices boost

On the occasion of the quarterly report presentation regarding the inflation, the Governor of the National Bank of Romania, Mugur Isărescu, declared that Romania is registering the second greatest local food price boost after Bulgaria.

Mugur Isărescu added that food prices boosts are the main thing that influence inflation boost and that the main imbalance that gets Romania in trouble is the production that does not cover the domestic consumption.

In March, food price increased with 1.17 percent compared with February and with 4.12 percent compared with December 2010.

Since the beginning of the year, there have been registered over ten percent price increases for vegetables and canned vegetables; moreover, potatoes price have increased with twenty percent while fruits and sugar price increased with twenty five per cent.

The National Bank of Romania forecasted that in 2011, inflation rate would be growing from 3.6 to 5.1 and from 3.2 percent to 3.6 percent in 2012.

Translated by: Cristina Anamaria Maricescu
MA Student, MTTLC, Bucharest University