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Inflation was 8% in 2010 and BNR could miss the target in 2011

The annual rate of inflation was at the end of last year 7.9% - 8% and BNR will miss in 2011 the target for inflation, of 3% plus/minus a percentage point, for the fifth year in a row, the majority of the economic analysts considered. The estimates of the analysts for December 2010 a monthly inflation of 0.4-0.6% and an annual rate of 7.85 – 8.1% much over the target of the central bank of 3.5% plus/minus a percentage point. The analysts anticipate that the annual inflation will be kept at about 7% for the first part of the year, so that starting with July the effect of VAT increase disappear and the rate to start to drop to 3.3 – 4.8% in December.  « In December the monthly inflation was 0.4% and the annual rate of 7.9%. In January – June the inflation will be about 6.5 – 6.9% so that in July it will drop to 4.8%, level which I anticipate for December as well » the head –economist of ING Bank Romania, Nicolaie Chidesciuc said. He sees risks for the present prognosis regarding the inflation on the part of pressure on prices for food, which continued in the first part of 2011, from imported inflation, under the conditions where inflation in the euro zone and other states in the region started to grow, but the possible increase of taxes and some prices administered, such as natural gas.  «  I perceive a high risk from possible increase of taxes, mainly excises, such as tobacco ones. At the same time, we speak about price adjusting for thermal energy, which was postponed in 2010. Depending on the decision to be taken in the case of subsidies for thermal energy, the effect on inflation could be approximately one percentage point » Chidesciuc said. The head economist of ING Bank Romania said that in Romania the inflation could not drop for the next 5-10 years, under the conditions where the economy was in a process of real convergence towards the European Union.  «  Inflation in Romania should be 1.5-2 percentage points over the one in the euro zone, 3.5% - 4%. More ambitious targets could harm the economy » Chidesciuc says. The head –economist of UniCredit Tiriac Bank, Rozanlia Pal estimates that in December 2010 the monthly inflation was 0.6% and the annual rate 8% and for the end of the year she sees an inflation of 4.2% over the BNR target.  « The factors who determined in the past the increase of consumption prices did not depend on BNR. In 2010 there were uncertainties on the part of the supply, such as deficiency of food and risks which were estimated on the part of the demand and which targeted the evolution of the oil price. In 2011 we expect these effects to continue but to be calmed down over the second part of the year. The challenge, for the central bank, will be place the inflationist estimates in a stable environment, from the point of view of macroeconomic conditions, including the exchange rate » Pal considers. At the same time, the head-economist of BCR Lucian Anghel thinks the annual rate of inflation was situated in December 2010 at 7.9-8.1% and will drop to 4.3% at the end of 2011 but it will be above the BNR target.  « If inflation exceeds the BNR target, this will be determined by adminstered prices and excises increases. As in the last year, it is hard to fight with such measures with the instruments of the central bank » Anghel said. On the other hand, the head-economist of BRD Florian Libocor and the RBS economist Florentina Cozmanca appreciate the annual rate of inflation will be within the BNR target.  « Monthly inflation was 0.4% in December and the annual rate of 7.85%. The annual inflation will record the maximum level over the first semester. During the year I expect a reduction of annual inflation to a value close to the level of 3.5%. The effects of the second round could be manifest in the first semester of the year » Libocor said. Cozmanca estimates a monthly inflation of 0.53% and an annual rate of 8% for the last month of 2010.  « The annual inflation will be reduced to 3.3% at the end of this year, after it will be for the first six months of 6.9- 7.3%. There are risks on the part of regulated prices, of evolution of prices on the international plan and food costs » Cozmanca said. The annual rate of inflation exceeded in 2007 and 2008 the  superior limits of intervals targeted by BNR by 1.5 percentage points each, after it was raised to 6.5% and 6.3% respectively. At the same time, the central bank missed the inflation target established for 2009, of 3.5% plus/minus a percentage point, under the conditions where the annual rate was situated at 4.74% in December. For 2010, the central bank revised several times the inflation estimates, in the context where the government decided the increase of VAT from 19% to 24% starting with July. The BNR governor Mugur Isarescu stated in November that the central bank calculated the impact of VAT increase on inflation could be higher towards the end of the year by 2.4 percentage points. Inflation is one of the criteria in the foreign financing agreement signed by Romania, worth 20 billion euro and coordinated by IMF. At the same time, inflation is among the convergence criteria Romania has to cover to access the euro zone.  

The estimates of the analysts for December 2010 a monthly inflation of 0.4-0.6% and an annual rate of 7.85 – 8.1% much over the target of the central bank of 3.5% plus/minus a percentage point.

The analysts anticipate that the annual inflation will be kept at about 7% for the first part of the year, so that starting with July the effect of VAT increase disappear and the rate to start to drop to 3.3 – 4.8% in December.

« In December the monthly inflation was 0.4% and the annual rate of 7.9%. In January – June the inflation will be about 6.5 – 6.9% so that in July it will drop to 4.8%, level which I anticipate for December as well » the head –economist of ING Bank Romania, Nicolaie Chidesciuc said.

He sees risks for the present prognosis regarding the inflation on the part of pressure on prices for food, which continued in the first part of 2011, from imported inflation, under the conditions where inflation in the euro zone and other states in the region started to grow, but the possible increase of taxes and some prices administered, such as natural gas.

« I perceive a high risk from possible increase of taxes, mainly excises, such as tobacco ones. At the same time, we speak about price adjusting for thermal energy, which was postponed in 2010. Depending on the decision to be taken in the case of subsidies for thermal energy, the effect on inflation could be approximately one percentage point » Chidesciuc said.

The head economist of ING Bank Romania said that in Romania the inflation could not drop for the next 5-10 years, under the conditions where the economy was in a process of real convergence towards the European Union.

« Inflation in Romania should be 1.5-2 percentage points over the one in the euro zone, 3.5% - 4%. More ambitious targets could harm the economy » Chidesciuc says.

The head –economist of UniCredit Tiriac Bank, Rozanlia Pal estimates that in December 2010 the monthly inflation was 0.6% and the annual rate 8% and for the end of the year she sees an inflation of 4.2% over the BNR target.

« The factors who determined in the past the increase of consumption prices did not depend on BNR. In 2010 there were uncertainties on the part of the supply, such as deficiency of food and risks which were estimated on the part of the demand and which targeted the evolution of the oil price. In 2011 we expect these effects to continue but to be calmed down over the second part of the year. The challenge, for the central bank, will be place the inflationist estimates in a stable environment, from the point of view of macroeconomic conditions, including the exchange rate » Pal considers.

At the same time, the head-economist of BCR Lucian Anghel thinks the annual rate of inflation was situated in December 2010 at 7.9-8.1% and will drop to 4.3% at the end of 2011 but it will be above the BNR target.

« If inflation exceeds the BNR target, this will be determined by adminstered prices and excises increases. As in the last year, it is hard to fight with such measures with the instruments of the central bank » Anghel said.

On the other hand, the head-economist of BRD Florian Libocor and the RBS economist Florentina Cozmanca appreciate the annual rate of inflation will be within the BNR target.

« Monthly inflation was 0.4% in December and the annual rate of 7.85%. The annual inflation will record the maximum level over the first semester. During the year I expect a reduction of annual inflation to a value close to the level of 3.5%. The effects of the second round could be manifest in the first semester of the year » Libocor said.

Cozmanca estimates a monthly inflation of 0.53% and an annual rate of 8% for the last month of 2010.

« The annual inflation will be reduced to 3.3% at the end of this year, after it will be for the first six months of 6.9- 7.3%. There are risks on the part of regulated prices, of evolution of prices on the international plan and food costs » Cozmanca said.

The annual rate of inflation exceeded in 2007 and 2008 the superior limits of intervals targeted by BNR by 1.5 percentage points each, after it was raised to 6.5% and 6.3% respectively. At the same time, the central bank missed the inflation target established for 2009, of 3.5% plus/minus a percentage point, under the conditions where the annual rate was situated at 4.74% in December.

For 2010, the central bank revised several times the inflation estimates, in the context where the government decided the increase of VAT from 19% to 24% starting with July.

The BNR governor Mugur Isarescu stated in November that the central bank calculated the impact of VAT increase on inflation could be higher towards the end of the year by 2.4 percentage points.

Inflation is one of the criteria in the foreign financing agreement signed by Romania, worth 20 billion euro and coordinated by IMF.

At the same time, inflation is among the convergence criteria Romania has to cover to access the euro zone.

Sursa: http://www.actmedia.eu

Tags: inflation romania chidesciuc economist raquo which risks prices points cozmanca euro where under conditions laquo level minus percentage increase annual target bnr could analysts point about first estimates central monthly december rbs bcr ing brd

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