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Central bank hikes inflation prognosis

Romania's Central Bank Governor Mugur Isarescu said today (Tues) the central bank had hiked the inflation prognosis from 3 per cent to 3.2 per cent in 2012.

It is expected for the inflation rate not to drop below 2 per cent.

Less favourable effects are expected from volatile prices of food products.

For 2013, the inflation prognosis stands at 3 per cent.

Mugur Isarescu said that in 2011, inflation was close to the central bank's estimations.

The phenomenon of disinflation - a situation in which the inflation rate decreases, but does not reverse - was slowed down by hike of administrated prices and the depreciation of the Romanian currency RON against the US dollar.

The positive development of inflation in Romania last year was influenced by the diminishing effects of the VAT hike (back in July 2010, from 19 to 24 per cent), and the improvements of the international markets for raw materials, agricultural and energy products, next to the monetary policy.

The annual inflation in December reached 3.14 per cent, which is the lowest in the last 20 years, according to the data from National Statistics Institute.

The European Commission said in its autumn economic prognosis that Romania would have 2.1 per cent of economic growth in 2012. For 2013, the prognosis is 3.4 per cent growth of GDP.

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