Romania’s central bank revises upward its 2021 inflation forecast

17 March 2021

Romania's National Bank (BNR) increased its forecast for the headline inflation at the end of 2021 to 3.4%, under the latest quarterly Inflation Report, up from 2.5% envisaged under the report's previous issue.

The revision broadly reflects the retail electricity market liberalization, which resulted in higher electricity prices paid by households under the so-called universal service transitory regime, charged by suppliers until a contract on the free market is signed. Out of the 0.9pp revision, 0.6pp stands for the impact of the electricity prices.

BNR estimates that the market contracts will result in 5% higher prices on average that will partly reverse the 17-18% average increase in the electricity prices paid by households in Jan-Feb.

For the end of 2022, BNR projects 2.8% inflation - just above the 2.5% target.

As regards the CORE2 inflation, a measure that filters out the regulated and volatile prices to reflect longer-term trends relevant for the monetary policy, BNR expects it to end both 2021 and 2022 at 2.7%.

iulian@romania-insider.com

(Photo source: Bizroug/Dreamstime.com)

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Romania’s central bank revises upward its 2021 inflation forecast

17 March 2021

Romania's National Bank (BNR) increased its forecast for the headline inflation at the end of 2021 to 3.4%, under the latest quarterly Inflation Report, up from 2.5% envisaged under the report's previous issue.

The revision broadly reflects the retail electricity market liberalization, which resulted in higher electricity prices paid by households under the so-called universal service transitory regime, charged by suppliers until a contract on the free market is signed. Out of the 0.9pp revision, 0.6pp stands for the impact of the electricity prices.

BNR estimates that the market contracts will result in 5% higher prices on average that will partly reverse the 17-18% average increase in the electricity prices paid by households in Jan-Feb.

For the end of 2022, BNR projects 2.8% inflation - just above the 2.5% target.

As regards the CORE2 inflation, a measure that filters out the regulated and volatile prices to reflect longer-term trends relevant for the monetary policy, BNR expects it to end both 2021 and 2022 at 2.7%.

iulian@romania-insider.com

(Photo source: Bizroug/Dreamstime.com)

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