Romania's annual inflation quickens to three-year high in July

Romania's annual inflation quickens to three-year high in July 1000 Words/Shutterstock.com

BUCHAREST (Romania), August 11 (SeeNews) - Romania's annual consumer price inflation quickened to 1.4% in July from 0.9% in June, reaching a three-year high, data from the national statistical office, INS, showed on Friday.

July is the seventh straight month of rising consumer prices in Romania and the inflation rate in that month is the highest since September 2014, when consumer prices climbed 1.54% year-on-year.

Food prices rose 2.39% year-on-year in July, while non-food prices edged up 0.49%, INS said in a statement.

Prices in the services sector decreased by 1% year-on-year in July.

On a monthly comparison basis, Romania's consumer price index (CPI) rose 0.32% in July. Food prices fell 0.39% month-on-month in July, non-food prices climbed 0.93% and services rose 0.14%.

Consumer prices rose 0.1% in the six months through June.

Romania returned to inflation in January following 19 straight 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% at the start of 2016 and then again to 19% starting January 2017.

In an inflation report issued earlier in August, Romania's central bank, BNR, said it has increased its annual inflation forecasts for this year and next, to 1.9% and 3.2%, respectively.

"The revision is largely attributed to domestic inflationary pressures, which are associated with the build-up of a stronger-than-previously expected excess demand throughout the forecast horizon," BNR said in the report.

On August 4, BNR maintained its monetary policy rate at a record low 1.75%. The central bank last changed the key rate in May 2015, when it cut it by 25 basis points.

(1 euro=4.5750 lei)

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