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Isărescu: The slowdown in energy prices, among the main factors that calmed inflation

10 August 2023

The Governor of the National Bank of Romania (BNR), Mugur Isărescu, stated that it is very difficult to do what Romania did last year, “that is, to bring inflation down and not create a recession.” He specified that it is a difficult balance to achieve that so far “has worked out for us”, noting that this meant an extension of the demand surplus, according to At the same time, he said that among the main factors that lowered the inflation rate was the strong disinflation at the level of energy goods.

“The annual inflation rate, measured with the Consumer Price Index indicator, calculated by the Statistics (Institute) of Romania, accentuated its downward course in the second quarter of 2023… The main determinants that brought the inflation rate down are the strong disinflation at the level of energy goods, the continuation of the correction quotations for raw materials, the agreement of local processors and merchants to reduce the price of milk consumption, the further tempering of the inflationary expectations of economic operators, and several factors acted in the opposite direction, I mention now: the increase in labor costs, the trend still upward movement of import prices with all the stability of the exchange rate and the persistence of excess demand, which is, however, in visible mitigation. However, we maintain the best position at the regional level from the perspective of the inflation rate, especially if we have the average annual variation, we are still in 9th place,” explained the governor of the BNR, in the Inflation Report.

He specified that there is a decrease in fuel prices and there is a favorable evolution in the segment of processed foods.

“This is the composition of the consumer price index and you can see the negative part for the first time, quarterly, we have fuel evolution, negative evolutions, in the sense of decreasing prices, decreasing prices. What else do we notice? That we also have favorable evolution in the segment of processed foods. The fluctuation of the crude oil quotation at levels lower than those of the previous year kept the annual variations of fuel prices in negative territory in Q2, in the second quarter. The prices at the pump are, let’s call them, reasonable. Any increase is not good, but they are reasonable compared to what we had last year. The quotations of raw materials continued their correction, with beneficial effects along the production chains. This evolution of raw materials positively influenced us as well, but not only us, in general, inflation in the world, in Europe, we live in Europe, came down thanks to this evolution, this time favorable, of the quotations of the main raw materials. Consequently, after we were scared last year, due to the prices of industrial production which, you see, are increasing a lot, they came down to levels very close to those of the consumer price index,” Mugur Isărescu also said.

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