Romania Consumer Prices Extend Decline In July; Annual Inflation At -1.7%

08.11.2015 By Bogdan Neagu

Romanian consumer prices extended their decline in July, after a major cut in the month before provoked by the reduction of the value added tax rate for food products.

Consumer prices were down 0.17% against June, while the annual inflation rate was at minus 1.7% in July, according to data released by the country’s statistics institute INS Tuesday. In June, the annual inflation turned negative for the first time in more than 25 years as Romania cut the VAT rate for food products to 9% from 24%.

The food prices went further down in July, when they were down 1.2% against the previous month. Prices of non-food items and of services were up 0.5% and 0.1%, respectively, compared with June.

Romanians paid 10% less for vegetables in July compared with a month earlier, and fresh fruit was by almost 4% cheaper than in June. In the non-food sector, natural gas prices increased 11% on the month, while utility prices were up 0.9%.

Compared with July 2014, food product prices were down 7.3%, while the prices of non-food items and services rose 1.3% and 2.2%, respectively.

Romania’s central bank cut down its inflation forecast for the end of 2015 to minus 0.3%, as it predicts the annual inflation rate will stay in negative territory over the next three quarters. The bank expects the inflation will return to positive territory by the end of next year, when the annual rate is seen at 0.7%.