fbpx Modifica setari cookieuri


Budget implementation: 5-month deficit increased to 3.59%. From where, how much, how

The implementation of the consolidated budget in the first five months of 2020 registered a deficit of RON 38.8 billion (3.59% of GDP), of which… Mai mult

2020 European Innovation Scoreboard: Big problems of Romania, which is by more than 68% behind EU average

Romania remains the weakest innovator in the EU, with a score in last year’s indicator ranking at only 31.6% of the EU’s average performance, according… Mai mult

Four warning signals for Romania in 2020 Convergence Report

According to March 2020 data, the EC Convergence Report for Romania points out that the long-term interest rate for convergence purposes was 1.5 percentage points… Mai mult

Conditions and mechanism for accessing financing from recovery fund: supervision, indicators, approvals, diplomacy

The European Commission is doubling its efforts to show that Europe has learned the lessons of the past and will avoid now, after the “Great… Mai mult

S&P maintains Romania’s rating at level recommended for investments: Romania has access to foreign financing / Fiscal consolidation is inevitable after elections

Rating agency Standard & Poor’s has confirmed the ratings for Romania at ‘BBB minus / A-3’ and maintained the negative outlook. This rating maintains Romania… Mai mult

Rapid advance of inflation – fed by administered prices

de Marin Pana 28.8.2017

According to the data provided by INS, Romania registered a 0.32% increase in prices in July 2017 compared to the previous month, the highest level in the last nine months. By aggregating with the unfavourable base effect (prices had declined by 0.24% in July 2016), the inflation rose significantly and reached 1.42%.

It should be noted that in the absence of a change in the regulated prices under the state administration, the inflation registered last month would have been the same as in other summer months, namely negative (-0.10%). The abnormal increase in the price index has been caused exclusively by the almost 5% increase in the electricity price, which accounts for a significant share (6.07%) in the Romanian consumer basket.

Significantly, the CORE 2 indicator, namely the part of the inflation under the influence of the monetary policy, fell to the lowest value in the past 5 months, namely 0.10%, indicating an attempt to offset the effects of the fiscal-budgetary policy (which is under the responsibility of the Government) by the monetary policy (under the BNR’s responsibility).


  • Evolution of the price indexes (IPC) in July 2017 compared to June 2017
  • Total IPC
  • Total IPC, excluding alcoholic beverages
  • Total IPC, excluding fuels
  • Total IPC, excluding the regulated prices
  • Total IPC, excluding the vegetables, fruits, eggs and products with regulated prices
  • Total IPC, excluding the vegetables, fruits, eggs and products with regulated prices, drinks and tobacco products


In fact, in July, prices of food products decreased by 0.39%, under the effect of a 3.88% drop in prices of vegetables and canned vegetables (again, potatoes had an important role, with a 9.28% decrease) and 2.16% in prices of fruits and canned fruits. Although notable in terms of the fight between imported and domestic products, the reduction was higher for citrus fruits and fruits from southern regions (-2.68%) than for fresh fruits (-1.61%).

Also, it is noteworthy the discreet but significant increases in prices for pork (+ 0.46%), meat preparations (+0.38%), butter (+1.22%), cow’s milk cheese (+0,17%) or sugar (+0.26%). This is because the quite high price drop in vegetables and fruits is seasonal, whereas the (relatively low) increase in the above-mentioned basic food categories is practically irreversible.

Non-food goods would have remained close to zero if we had disregarded the electricity and cigarettes, another category under the direct influence of the state through the excise duties. The latter had a price increase of 0.58% in July 2017, having a share of over six percent in the consumer basket the same as the electricity.

Moreover, there were also manufactured products whose prices fell slightly, such as medicines (-0.02%), leather footwear (-0.05%), detergents (-0.07%) or cars and spare parts (-0.11%).

On the other hand, the tariffs of services increased by 0.14% in July, with the main upward influences coming from the ever-discreet price increase of water services, sewage and sanitation (+ 0.65%), and in downward from the telecommunication services (-0.17%), which benefited from the decrease in the euro/leu exchange rate based on which these services are invoiced.

All in all, if we look at the evolution of price indices over the last 12 months, we can notice a rather pronounced increase in the annual inflation, to an unprecedented level in the past two years. That, despite that the component under the effect of the monetary policy has been kept at levels much more constant than those induced by the debatable measures implemented at the government level. The CORE 2 variation was only 0.32%, while the annual inflation rate change already reached 2.09%, meaning six times higher.


  • Evolution of inflation rate over the last 12 months
  • Month
  • Inflation
  • CORE2 adjusted
  • Annual inflation


For the time being, the average rate over the last 12 months has just increased to 0.1% according to the national methodology and 0.3% according to the methodology harmonized at the EU level. However, lower IPC values of the previous year will be replaced by higher ones in the coming months, as a result of the significant (and hazardous) increase in the population’s incomes without a connection with the work productivity.

By the end of the year, it is expected a gradual increase in the inflation index somewhere below the theoretically desirable rate of 2%. But only if the Government intervenes effectively to stop large price variations such as for electricity. Unfortunately, the calls for prudence in the policy for increasing the incomes (be they wages in the public sector or pensions) have not been heard and the budget’s need for money calls for a revenue growth.

Unfortunately (for us), the budget law has been adopted in nominal terms and the value of the national currency included in the revenue targets is not defined as stable. There will be therefore an objective tendency to increase the revenues by exacerbating inflation, simultaneously with delaying investments (which should also be made at higher prices).

A revenue increase that can be made even outside the market, by administrative means, such as changing the price of electricity and increasing the excise taxes on fuels, energy resources that share the characteristic of transferring the price increase to all the other products. This way, we can pass the deficit control point of 3% of GDP at the end of the year, but the effects will be devastating in terms of the purchasing power decrease in 2018.

Mergeți în homepage ›

Publicat la data de 28.8.2017

Lăsați un comentariu


Nuclearelectrica shareholders approved to terminate negotiations with Chinese for building reactors 3 and 4 from Cernavoda

Nuclearelectrica's Board of Directors has been mandated to initiate proceedings to terminate negotiations with China General Nuclear Power Group (CGN), as well as legal effects… Mai mult

Renault holds expansion of its plant in Romania, 15,000 jobs cancelled at global level

"Putting capacity growth projects planned in Morocco and Romania on hold" - is one of the measures included in the draft plan of Renault Group… Mai mult

Romania is a net importer of electricity in 2020 as well

Romania imported an amount of electricity of almost 796 GWh in the first month of this year, by more than 36% above what it exported… Mai mult

Shareholders of Galati steel plant promise investments of one billion euros

GFG Alliance has committed to invest one billion euros to upgrade Galati steel plant in order to reduce emissions and increase production. Another EUR 1… Mai mult

Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult

Business internationalization / eMAG makes a step to entry five new international markets and targets a business of EUR 2 billion

eMAG hopes to get the opinion of the Hungarian Competition Council over the next two months for the acquisition of Extreme Digital, the market leader… Mai mult