<\/p>\n
In the second quarter of this year, inflation in Romania, already the highest in the European Union, was further raised mainly by increases in the prices of energy, oil and gas, as well as of raw materials such as fertilisers, aluminium and polyethylene. The conflict in the Middle East was also quick to translate into increased fuel prices.<\/p>\n
<\/p>\n
But in July the trend changed. There was a strong decrease in inflation, especially as the direct effects of the complete electricity market deregulation wore off. This week, the National Statistics Institute reported 8.16% inflation in July, down from 10.42% in June, the first such drop in 12 months. The governor of the National Bank, Mugur Is\u0103rescu, said the decline should continue in August.<\/p>\n
<\/p>\n
Even so, the institution revised its inflation forecast for the end of 2026 upwards, to 6.1%, and expects it to reach 3.4% by the end of next year, also higher than expected. Drought, heat waves and their effects on electricity production and energy prices are to blame for the slowdown in the downward trend, while fuel prices also have an influence.<\/p>\n
<\/p>\n
Adding to these, governor Is\u0103rescu says, are geopolitical tensions, the extended energy crisis and the continued fragmentation of international trade. In the economy, domestic demand is weaker, private spending has decreased amid reduced purchasing power, lower personal lending and low consumer confidence. In contrast, corporate lending has increased by approximately 20%, and investments continue to advance, albeit more slowly.<\/p>\n
<\/p>\n
Lower demand helps with inflation, but affects economic growth. The central bank governor does not expect a quick recovery and sees the absorption of European funds as vital. At the same time, the trade deficit has decreased, while industry and exports remain affected by weak demand on European markets. The central bank says that the national currency, the leu, now has a more flexible exchange rate, and the institution\u2019s interventions in the foreign exchange market were much below last year. At the same time, governor Mugur Is\u0103rescu emphasised that the key interest rate will not be lowered until inflation has fallen below its level.<\/p>\n
<\/p>\n
Finally, as regards the transition to the euro, for the time being Romania does not meet the required criteria, and it needs many years to achieve this goal. For now, Mugur Is\u0103rescu says, Bucharest must focus on reducing the fiscal deficit below 3% of GDP and maintaining fiscal discipline. (AMP)<\/p>\n","protected":false},"excerpt":{"rendered":"
In the second quarter of this year, inflation in Romania, already the highest in the European Union, was further raised mainly by increases in the prices of energy, oil and gas, as well as of raw materials such as fertilisers, aluminium and polyethylene. The conflict in the Middle East was also quick to translate […]<\/p>\n","protected":false},"author":109,"featured_media":1048322,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[37738],"tags":[35171,36847,29488],"coauthors":[115219],"class_list":["post-1048398","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-today-in-the-news","tag-forecast","tag-fuel-prices","tag-inflation"],"acf":[],"yoast_head":"\n