February 15 (SeeNews) - Romania swung to annual inflation of 0.1% in January following 0.5% deflation in December, data from the national statistical office, INS, showed on Wednesday.
Romania returned to inflation after 19 consecutive months of deflation that began in June 2015 after a 9% cut in VAT rate was expanded to include all food items, non-alcoholic beverages and food service activities. In addition, Romania cut its standard VAT rate from 24% to 20% from the start of 2016.
Food prices rose 1.12% year-on-year in January, while non-food prices fell 0.24%, INS said in a statement.
Prices in the services sector decreased by 1.08% year-on-year in January.
On a monthly comparison basis, Romania's consumer price index (CPI) fell 0.19% in January. Food prices rose 0.91%, non-food prices fell 0.93% and services depreciated 0.37%.
At the beginning of February, Romania's central bank, BNR, lowered its 2017 inflation forecast to 1.7% from previously projected 2.1%. The lower forecast reflected the effect from the elimination of 102 fees and charges by the government, BNR said in a quarterly inflation report.
On February 7, BNR maintained its monetary policy rate at record low 1.75%, in line with analysts' expectations. The central bank last changed its monetary policy rate in May 2015, when it cut it by 25 basis points.
(1 euro=4.5048 lei)