Romania’s consumer prices inched up by 0.16% in December versus November and the annual inflation eased to under 3.3% in the month from 3.4% in November.

The prices of non-food goods advanced by 3.8% over the 12 months ended December 2018 compared to the 3.1% y/y advance of the food prices. The fees paid by households for services increased by only 2.4% y/y.

The average inflation rate in 2018 was 4.6% y/y, up from 1.3% y/y in 2017. The exchange rate correction after steady widening of the current account deficit during 2018 is expected to exert certain inflationary pressures (the local currency hit two-year’s low these days and keeps weakening at very moderate pace).

The supplementary taxes enacted by the Government under emergency ordinance 114/2018 also have direct and indirect inflationary effects, possibly resulting in certain upward adjustment of the central bank’s inflation outlook.

The central bank currently expects headline inflation to remain slightly under 3.5% over the next few months. The central bank’s inflation target is 2.5% with a variation band of +/- 1 percentage point.

editor@romania-insider.com

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