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Annual inflation down to 8.02 pc in August

Bucharest - The annual inflation (August 2007-August 2008) dropped in August to 8.02 per cent vs. 9.04 per cent in July, the consumer prices falling 0.09 per cent, according to the data published yesterday by the National Institute of Statistics (INS). This deflation from August 2008 is the second after 1989, after August 2006 when the prices dropped 0.07 per cent, decisive being at that time the fall of the food prices.

Thus, in August 2008, the fall of the prices was largely determined by the fall of the service tariffs which dropped by an average of 0.9 per cent in August. The biggest fall was registered by the phone tariffs and air transport, of around 3.92 per cent, respectively 1.56 per cent. As for the prices of the non-food commodities, they remained similar compared to the previous month, but slight falls were registered by cars and spare parts - 1.07 per cent, fuels - 0.77 per cent, watches, audio and video devices, sports items - 0.11 per cent.

In exchange, the prices of the food registered a growth of 0.2 per cent in August against July, the most significant rises being recorded by eggs - 6.2 per cent, beans and vegetables - 2.85 per cent, sheep cheese - 2.15 per cent, potatoes - 1.97 per cent, and fresh cheese - 1.53 per cent.

On another hand, the fresh fruit registered a fall of 5.38 per cent in August, while the lemons and other southern fruits of 1.4 per cent.

Reactions: BNR interest rate could be reduced

The evolution of inflation in August, a bit more optimistic that the market expectations, could determine the National Bank of Romania (BNR) to maintain or even to reduce the monetary policy interest rate this year, which will be reflected in a depreciation of the RON against the EUR, consider the economic analysts quoted by Mediafax.

Thus, according to ING Bank, Raiffeisen Bank and BRD-Groupe Societe Generale analysts, the data regarding inflation in August would not justify a new increase of the monetary policy interest rate, some of them estimating that BNR could even reduce the interest rate this year, from the current level of 10.25 per cent per year. "Probably that the Central Bank will not increase the interest rate on September 25. Many foreigners hahd estimates connected with the growth of the interest rate.

The revision of the expectations will exert a pressure on the gradual depreciation of the RON in the coming period," declared Nicolae Alexandru-Chisdeciuc, senior economist ING Bank.

BNR analysts note that the data regarding inflation in August comply with the expectations connected with the reduction of the consumer price index below seven per cent in December, and do not confirm the theories regarding the overheating of the economy.

"Such an evolution of the prices was expected. In August, the main influence factor was the telephony price, on the one hand as a result of the evolution of the exchange rate, and on another hand as a result of the aligning of the tariffs," said Ionut Dumitru, chief of research department, Raiffeisen Bank. For September, the analysts anticipate an annual inflation rate of 7-7.1 per cent, the prices being set to grow slightly or remaining unchanged.

According to a BCR analysis, the fall of the international quotation of oil, the rich internal offer of food and agricultural products and the monthly appreciation of the RON will have a positive impact on inflation.

The analysts do not exclude a considerable reduction of inflation in September as well.

Fin Min Vosganian: Inflation may reach 6 pc. Budget deficit stays at 2.3 pc of the GDP

Inflation may reach 6 per cent by the end of the year, Finance Minister Varujan Vosganian has told ‘The Money Channel' recently. Minister Vosganian also considers the eventuality that administered prices may not be increased this year. In what regards the 2010 target, the Finance Minister suggested that it would be less than the 3.5 per cent inflation target set for 2009.

‘If the figure for August is confirmed tomorrow and if it is below zero, that will mean that we will drop to 8-8.2 per cent and to 7.5-7.8 per cent in September, so that we can register less than six per cent at the end of the year. There is a major chance that we may not increase administered prices by the end of this year' said the official.

He further added that, despite contingencies such as the expenses incurred with the flood victim relief or with the payment of pecuniary indemnities to judges and prosecutors, the 2008 budget deficit rests at the level of 2.3 per cent of the GDP. All of that may also be completed by the refund of the vehicle registration charge amounting to around half a million EUR.

‘We will keep the deficit to 2.3 per cent. This is a difficult year, a year when we have had major unbudgeted expenses: with judges and prosecutors - 0.1 per cent of the GDP, with the floods - 0.2-0.3 per cent of the GDP, the Salary Fund - 0.4 per cent of the GDP (teachers and doctors), as well as the monetary and foreign exchange risk where the foreign exchange difference means another cost of 0.3 per cent of the GDP because we had calculated Romania's contribution to the EU budget to be 3.2 per cent,' Vosganian explained. The Finance Minister's calculations may be overturned by the Parliament's decision that the vehicle registration charge should be refunded to payers.

‘If the Deputies sustain the Senate's decision, we will refund the money,' Vosganian added. According to the minister, the Ministry of Home Affairs and the Labour Ministry will receive more money upon the forthcoming budget rectification. The Government, however, has not budgeted any extra money to meet the early payment of public retirement benefits as it counted on the excess amounts collected into the social security budget. Concerning the Labour Ministry, the correction will consider social welfare measures and not the payment of public system retirement benefits before term.

 

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Tags: analysts vosganian budget annual interest prices inflation bcr brd air ing bnr

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