Consumer prices in Romania decreased by 0.2% in July compared to June, while the annual inflation rate went down to minus 1.7%, from minus 1.6% the month before.

In June this year, the annual inflation rate turned negative for the first time in the last 25 years. This was due to the VAT rate cut from 24% to 9% on food products and non-alcoholic beverages applied starting June 1.

Food prices dropped by 1.2% in July compared to June, prices of non-food products went up 0.5%, and services were 0.1% more expensive, according to recent data from the National Statistics Institute (INS). Vegetables were 10.3% cheaper in July compared to the month before. Also, potatoes were 8% cheaper while fresh fruits had 3.9% lower prices.

Compared to July 2014, food prices decreased by 7%, while the prices of non-food items and services went up by 1.3%, and 2.2% respectively.

Romania’s National Bank (BNR) has revised the annual inflation forecast at minus 0.3% for the end of this year and 0.7% for the end of next year, down by 0.5 percentage points, respectively by 1.2 pp compared to the previous estimations.

Negative inflation rate in Romania after VAT cut on food. 

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