Local lender ING Bank’s analysts have revised down their inflation forecast for 2016 and 2017.

Romania’s annual inflation rate will likely remain negative until next year, according to the new estimates. It will reach -0.8% at the end of December this year and will increase to 2.1% at the end of 2017.

Previously, the analysts estimated a level of 0% for the end of this year and 2.7% in December 2017. However, the food prices will go up if the law that obliges supermarkets to sell minimum 51% Romanian products enters into force, according to the ING prognosis.

The estimates also include a significant increase in the energy prices in the first quarter of 2017, the implementation of the general VAT rate cut from 20% to 19% starting January 1, 2017, and the elimination of the special excise duty tax for fuel, according to the ING report.

However, the ING analysts point out that there’s a high forecast uncertainty because of new political decisions that may be made before the elections, such as the possible VAT rate cut from 20% to 9% for utilities.

editor@romania-insider.com