November 10 (SeeNews) - Romania's annual consumer price inflation accelerated to 2.6% in October, from 1.8% in September, the national statistical office, INS, said on Friday.
Food prices rose 3.52% year-on-year in October, while non-food prices were up 3.26%, INS said in a statement.
Prices in the services sector decreased by 0.33% year-on-year in October.
On a monthly comparison basis, Romania's consumer price index (CPI) rose 1.28% in October, as food prices climbed 1.30% month-on-month, non-food prices increased by 1.74% and prices of services rose 0.16%.
Consumer prices rose 0.2% during the 10 months through October.
On Thursday, Romania's central bank said it has lifted its end-2017 inflation forecast to 2.7%, higher than it originally planned to do before the government announced controversial fiscal changes earlier this week.
The central bank, BNR, kept unchanged its 2018 inflation forecast of 3.2% made in August.
"We have calculated the inflation rate without all these fiscal changes: for the end of 2017, inflation would have stood at 2.3%, while for 2018, it would have been 3.1%. No doubt, without the tax impact, inflation rate would have looked better," BNR governor Mugur Isarescu said in a video conference.
In its previous inflation forecast made in August, BNR projected end-2017 inflation at 1.9%.
On Wednesday, the left-wing government coalition approved an emergency decree to change Romania's fiscal code. Starting January 2018, workers will pay the social security contributions currently paid by employers, while income tax will drop from 16% to 10%. Following the announcement, the Romanian leu weakened to a post-August 2012 low of 4.6279 per euro.
The upward revision of end-2917 inflation projection is largely attributed to increased production costs and wage increases, amidst uncertainty about energy prices, BNR said in its November inflation report.
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.
On November 7, BNR maintained its monetary policy rate at record low 1.75%. BNR also decided tonarrow the corridor of interest rates on its standing facilities around the policy rate to ±1.00 percentage points from ±1.25 percentage points
BNR last changed its key rate in May 2015, when it cut it by 25 basis points.
(1 euro= 4.6279 lei)