The inflation remained in negative territory at the end of 2015, in line with the prognosis, according to Romania’s National Bank (BNR).

The inflation will stay in negative territory for the first five months of this year, due to the cut in the VAT rate for food from 24% to 9%, in June 2015, and the general VAT rate from 24% to 20%, starting January 1, 2016.

At the beginning of 2017, the annual inflation rate will return to positive values and remain within the target range. The cut in the general VAT rate will use up its deflation effect by then.

The successive reduction of indirect taxes implemented during 2015-2017 influences the inflation’s volatility in this period.

editor@romania-insider.com