Romania’s annual inflation rate has reached a new low of -2.7% in February, after a 0.24% month-on-month drop in the average consumer prices, according to recent data from the National Statistics Institute (INS).

In January, the annual inflation rate stood at -2.13%.

On average, the food prices were 0.34% higher in February compared to the previous month but the non-food products were 0.27% cheaper and the service prices went down by 1.14%.

The air transport prices registered the biggest price drop in February compared to January (-4.29%), followed by phone services (-4.21%), heating (-1.98%), and eggs (-1.68%). On the other hand, the biggest price increases were registered by citrus and other southern fruits (+4.45%), potatoes (+2.24%), and sugar (+1.16%).

When compared to February 2015, the food prices were down by 6.5%, the non-food product prices were 0.5% cheaper, and the service fees were 0.3% lower. The price declines are the result of two VAT rate cuts. The VAT rate for food was reduced from 24% to 9% in June 2015 and the general VAT rate was cut from 24% to 20% on january 1, 2016.

Romania’s National Bank BNR estimates an inflation rate of 1.4% for the end of year, and of -3% for the end of March 2016.

Irina Popescu, irina.popescu@romania-insider.com