The war in Ukraine and inflation
The inflation rate to stay at high level all year, says the National Bank of Romania.
Leyla Cheamil, 13.05.2022, 14:00
The
inflation rate is going up in Romania amid the rising cost of food,
fuel, natural gas and electricity and in the context of the Russian
military aggression in Ukraine. In its latest forecast published on
Thursday, the National Bank revised its inflation rate forecast up to
12.5% for the end of the year, with a 6.7% level estimated for the
end of next year. These levels are 3.5% higher than the previous
forecast. The central bank estimates that the inflation rate may peak
in July and remain high all year. In the medium run, inflationary
pressures are expected to diminish gradually. These estimates are
based on the dramatic rise in production costs driven by the Russian
invasion of Ukraine. The National Bank of Romania says the future
developments of the energy and health crisis further add to the
uncertainty.
On
Wednesday, the National Institute for Statistics said the annual
inflation rate hit 13.7% in April, with prices going up by this much
compared with April 2021. The price of natural gas, which almost
doubled, saw the highest rise. The governor of the National Bank of
Romania Mugur Isărescu
says this trend is not likely to improve anytime soon and recalled
that prices began to go up last summer. He said, however, that
Romania’s economy is not in recession and may even see a growth of
2% this year.
President
Klaus Iohannis is also expecting the economic situation to remain
difficult, even after the end of the conflict in Ukraine, which he
views as the main cause for these negative developments:
These
things and the crises that will follow, because experts are telling
us that the problems will persist, problems
with the energy, will affect the entire world, not only Romania. All
this has one cause and that’s Putin’s war against Ukraine. The
Romanian government can only soften the impact of these crises and
help vulnerable consumers, people with low incomes, but the problem
is not restricted to Romania, it is global. In the US, for example,
the inflation rate is nearing 10%. The inflation rate is also high in
other countries in Europe. The problem is caused by the war, and we
should harbour no illusions, even if the war ends tomorrow, the
crises will not end tomorrow, they will continue. Some complicated
times are in store and we should be aware of this.
President
Klaus Iohannis also said that the inflation rate is only one factor
and expressed confidence that the government has taken and will
continue to take the necessary measures. (CM)
