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How will inflation evolve?

The Romanians consider that the annual inflation rate will be over 6% by the end of 2011, although the BNR prognosis indicates an inflation of 5.1%. About 67% of people participating in an opinion poll made by eZonomic consider that inflation will be higher than 6%, while only 17% think it will be between 5% and 6%.

The Romanians' opinion on how the inflation rate will evolve until the end of 2011 is more pessimistic than that of the National Bank of Romania. Thus, 67% of persons participating in an opinion poll consider the inflation rate will be over 6% at the end of 2011, while only 17% thins the annual inflation rate will be between 5 and 6%.

About 7% of respondents think the inflation rate will be between 4 and 5% at the end of the year and only 9% expect an inflation rate lower than 4%, Over 5,500 persons answered the latest sZonomics opinion poll and the statistic error of the sample is about +/- 1.2%, for a confidence level of 95%.

The people's worries about price rises are also shown by the opinion poll made by the European Commission. Thus in April 2011, about 59% of respondents considered that prices had risen significantly in the last 12 months, while 35% expected prices to grow more rapidly in the next 12 months.

1,000 persons participate in the EC monthly opinion poll and are questioned about their perceptions and expectations on several macroeconomic indicators , inflation included.Nicolaie Alexandru Chidesciuc, the chief economist of ING Bank Romania points out that inflationist expectations are important as they represent one of the most important channels by which the monetary policy influences economic activity.'They influence the price making process through several channels. The firms will modify prices according to inflationist expectations and expenses associated with changes. As for the people, inflationist expectations are important for salary negotiations and in choosing the consumption, saving or investment behaviour,' Chidesciuc explained.

The ING economist also pointed out that, in the context of an inflation target strategy, like the one used by BNR, inflationist expectations are very important since their deviation from the central bank target reflects the degree enjoyed by the monetary authority. 'The credibility of the monetary policy built with transparency and responsibility is a key factor in reaching the price stability target,' the ING representative said.

Annual inflation was more than 8% in March, when food prices continued to grow, especially for vegetables and fruit. The analysts' expectations are not positive and indicate a growing inflation by mid 2011.Although the people expect an inflation rate higher than the one foreseen by the central bank, Mugur Isarescu, the BNR governor says anticipation have not been anchored , referring to an opinion poll made by BNR among bank analysts.

'Anticipations, or the credibility of the BNR anti-inflationist engagement, remained in the interval targeted by BNR. In other words there is an idea that these inflation growth episodes are temporary, ': Isarescu declared at a press conference when he presented the quarterly report on inflation.

The new prognoses presented by BNR indicate a 5.1% inflation at the end of 2011. The BNR governor and a 3.6% inflation rate for the end of 2012. The BNR governor pointed out that a new prognosis for 2011 did not include higher prices for the thermal energy. The BNR governor pointed out that the new prognosis for 2011 did not include price rises for thermal energy, an increase which will appear in the Fall.

Sursa: http://www.actmedia.eu

Tags: inflation expectations inflationist prices opinion about bnr ing

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