The headline inflation in Romania eased to 2.3% year-on-year in May, continuing the steady deceleration from 4.0% at the end of last year, the statistics office INS reported.

Food prices rose the most, by nearly 5.3% year-on-year, while the rise in the average prices of non-food goods (+0.15%) was moderated by the low oil prices this year. The average service fees increased by 2.6% year-on-year.

The main disinflationary driver during the year-to-date period was the price of fuels, which declined by some 10% over the first five months while the consumer prices increased on average by nearly 1.5% in the same period.

The overall deceleration of the annual inflation was somehow slower than initially anticipated since the drop in oil prices was partly offset by the robust advance of the prices of fruits (+5.4% in May alone and 18.7% in Jan-May) and potatoes (+20.8% in Jan-May despite 0.7% decline in May alone).

Banca Transilvania, the biggest lender by assets in Romania, estimates a 3.05% average annual inflation rate over the 2020-2022 period. Romania's National Bank (BNR) has reduced the projected headline inflation estimates compared to its February forecast, to 2.8% at end-2020 (from 2.7% in April), and 2.5% at end-2021.

editor@romania-insider.com

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