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While deflation has already bitten the euro area, Romania was held still standing and only registered a decrease of rhythm, disinflation, last month. Central bankers moved to make the RON cheaper, reducing the monetary policy rate by a quarter of a point to 2.5% as an anti-deflationary measure.
Currently, the depreciation of the RON held deflation tied up, as there was no steep drop in prices, but everything depends on the oil price, Raiffeisen Bank analysts say. The annual inflation rate was in December 2014, lower than analysts’ expectations, which estimated an increase in consumer prices of 0.9% year on year, the Raiffeisen analysis reveals. The bank forecasted an inflation of 1.1% at the end of 2014.
According to the source quoted by Agerpres, the inflation rate will continue to decline, even below zero, temporarily, if there will be a rebound in oil prices at international level.
“Negative inflation rate in December compared to November was due to lower prices of non-food by 0.5%, as a result of the fall in fuel prices by 3% in one month. The positive dynamics of food prices (0.24%) and tariffs for services was driven mainly by the depreciation of the RON”, bank analysts say.
In addition, inflationary pressures remained low in December, almost the same level as in the previous month, while Core 3 annual inflation (inflation excluding administered prices, volatile – food and fuel prices on tobacco and alcohol) increased 1.2% in December from 1.1% in November.
In these circumstances, bank analysts argue that without a rebound in oil prices in the near future, the annual inflation rate will continue to decline in January and could remain close to 0% – 0.2% during January-May 2015.
Moreover, a temporary entry in the annual rate of inflation in negative territory cannot be excluded and, in this context, there is a good chance that the annual inflation rate may fall below current bank forecast of 2% for the end of 2015, Raiffeisen Bank analysts explained.
