Page 77 - bne IntelliNews SE Outlook Regions 2024

of the fiscal policy, and its credibility, will be another factor.
Compared to two years earlier (in November 2021), consumer prices in Romania rose by 25%, while they surged by 34% over the past three years.
On a medium-term perspective, food prices rose faster than average: by 30% during the past two years (+25% consumer price average) and by 38% during the past three years (+34% consumer price average). The recent slowdown (-0.16% m/m in November) is thus a correction.
The energy prices (at the level of residential consumers) dropped by 5.7% y/y as of November 2023, but they were still 34% higher than two years earlier and 65% higher than three years earlier.
The BNR kept the monetary policy interest rate unchanged at 7% at its November 8 board meeting, a measure that was broadly expected particularly as the inflation outlook has deteriorated slightly after the endorsement of the fiscal package that will create inflationary pressures in January.
The policy rate thus remains at the same level as it was set in January, at a time when the consumer price inflation was 15% y/y.
Inflation decreased significantly through 2023, but the BNR said it revised upwards the price trajectory for 2024 while envisaging steeper price moderation in 2025.
The updated forecast reconfirms the outlook for a further fall in the annual inflation rate over the next two years, albeit on a higher than previously envisaged path in 2024, yet slightly lower during the subsequent quarters.
Specifically, the annual inflation rate is expected to go up at the onset of 2024 – under the impact of the increase and introduction of some taxes and charges – before declining gradually over the following quarters, but to accelerate its drop in 2025, falling inside the variation band of the target at the end of the projection horizon.
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