NBR estimates inflation will fall starting in June

Starting in June we should see a decrease in inflation, the NBR estimates, based on the consideration that the effect of the VAT increase will have passed by then.

Latest statistics show that we had inflation in May, mainly due to the rises in the market.

Still, the average inflation rate has decreased steadily since January. The figures seem encouraging at first sight, considering the fact that some financial analysts have forecast a higher monthly inflation rate in May.

We are talking about a very small difference between the estimated inflation, 8.5 percent, and the constant one, 8.4 percent, hence the null effect of this optimism for the living standards of citizens.

Last summer the VAT increase had an impact on prices and removed the NBR inflation target range.

This evolution has been added to the impact of other austerity measures taken by the executive and have hit the purchasing power of Romanians.

What really matters is the purchasing power and two or three years will have to pass until it will increase again, economic analyst Constantin Rudniţchi estimates.

‘We have, let us say, a combined effect in terms of the purchasing power decrease, the salaries decrease or the revenue decrease - and I am referring to budgetary employees and to those in the private sector. This effect has also been related to an increase of the inflation because we have the highest inflation in the European Union and so I would say that regarding certain categories of goods or employees or regions, inflation is even higher than the official one, it lowers the purchasing power.’

Constantin Rudniţchi says that the recovery of purchasing power can be achieved only after the economic growth will have been reflected in the employers’ incomes and, subsequently, in those of their employees, which will happen in 2-3 years, the analyst added.


Translated by: Denisse-Meda Bucura
MA Student, MTTLC, Bucharest University