Radio România Internațional

Tag: annual inflation rate

  • From the budget deficit to the European minimum wage

    From the budget deficit to the European minimum wage

    The International Monetary Fund downgraded its forecast regarding the growth of the Romanian economy this year, from 2.8% in April, to 1.9% in its latest report. The average annual inflation rate is expected to reach 5.3% at the end of 2024 and 3.6% in 2025, whereas unemployment should remain at 5.6% and go down to 5.4% next year. The current account deficit is estimated at 7.5% of GDP this year and at 7% next year. The European Statistical Office (Eurostat) in turn published data showing that the government deficit in the European Union has increased from 3.2% of GDP in 2022 to 3.5% in 2023, the highest levels being recorded, last year, in Italy (minus 7.2%), Hungary (minus 6.7%) and Romania (minus 6.5%). In the case of Romania, Eurostat data shows that the government deficit increased from around 88 billion Lei in 2022 to almost 105 billion Lei last year (1 euro = approx. 5 lei, e.n.). Meanwhile, government spending decreased from 40.4% of the GDP in 2022 to 40.3% last year, while revenues went down from 34% to 33.7%.

     

    Previously, Standard & Poor’s reconfirmed the good rating of the government debt and the stable outlook of Romania. The agency warned, however, that Romania’s rating could be downgraded if the deficit continues to exceed forecasts and if other imbalances persist, such as high inflation or the current account deficit, i.e. the difference between high imports and low exports. Standard & Poor’s also predicts that the current pre-election spending, marked by increases in pensions and salaries in the public sector, will push Romania’s deficit to 7.3% this year. Since macroeconomic statistics usually fall on deaf ears in society, as many Romanians remain poor, with rampant inflation dramatically eroding their purchasing power in recent years, politicians decided to offer them some consolation. A little more than a month before the presidential and parliamentary elections, the Bucharest Chamber of Deputies adopted, as a decision-making body, the draft law on increasing the minimum wage. The law transposes a European directive that aims to improve the working and living conditions of employees. The document stipulates that the minimum gross basic salary guaranteed should be established annually through periodic updating, after consulting trade unions and employers’ associations at national level and taking into account the costs of living and other economic and social indicators. The value of the minimum gross salary is expected to stand between 47 and 52% of the average national salary. (VP)

  • Romania, slight drop in inflation

    Romania, slight drop in inflation

    The annual inflation rate in Romania dropped slightly, from 7.4% in January, to 7.2% in February, the National Statistics Institute reports. This means prices won’t be going up just as fast, although they will remain high compared to people’s purchasing power, economic experts say. According to statistics, Romania reports the highest inflation rate at EU level, where the average stands close to 3%. In Czechia, for instance, the inflation rate dropped below 3% in February, while in Hungary it stood at 3.7%. As of next month, Poland will lift the 0 VAT rate on food amidst an unexpected drop in inflation. In Romania, food prices remain high, while prices for services are on the rise. In February, prices for non-food products reported the highest increase on average, followed by prices for services and food. Major price hikes were also reported in February for potatoes – once the cheapest vegetable – 4.9%.

     

     

    Other fresh and canned vegetables reported price increase by 3.4% on average. Other price hikes were reported for fresh fruit – approximately 4.7%, detergents – 3% and prices for car subscriptions – 2.6%. Waterworks, sewerage and waste collection prices also went up by 2%. The most significant drop in prices was reported for airline tickets – 17%. Butter was also 9% cheaper compared to January. In the last 12 months, the highest price hikes were reported for postal services, which went up by 26.6% on average, and detergents – nearly 24%, followed by waterworks, sewerage, waste collection services as well as personal hygiene, cosmetics and medical products. We recall that the inflation rate stood at 6.6% at the end of 2023. As estimated by the National Bank of Romania, the inflation rate went up in January 2024 to 7.4%, and is expected to enter a downward trend of the course of this year. The increase was determined by the increase and introduction of indirect taxes with a view to consolidating the state budget. The subsequent drop in inflation could be determined by the downgrade in stock market prices for agrifood products and crude oil, but also by the fluctuation of import prices. The Central Bank expects the inflation rate to level out at 4.7% at the end of the year and to stand at 3.5% at the end of 2025. (VP)

  • February 23, 2022 UPDATE

    February 23, 2022 UPDATE

    ROMANIA AND UKRAINE -
    Romanian Prime Minister Nicolae Ciucă has assured his fellow Romanians, in the context of the
    Ukrainian crisis, that all necessary institutional measures have been taken, in
    keeping with the decisions of the Supreme Defense Council. He explained that
    these steps were taken in coordination with the NATO allies and EU member
    states. Prime Minister Ciucă
    called on the relevant ministers to keep monitoring the situation, coordinate and
    remain vigilant. In another development, the Senate and the Chamber of Deputies
    in Bucharest will convene in a joint session on March 1, to adopt a political
    declaration in support of Ukraine’s territorial integrity, sovereignty and
    independence. On Tuesday, Cristian Chirteş,
    chairman of the Joint Standing Committee of the Chamber of Deputies and the
    Senate for the exercise of parliamentary control over the activity of the
    Romanian Intelligence Service (SRI), said that Romania’s security situation
    from the perspective of the legal attributions of the Romanian Intelligence
    Service (SRI) is stable. He also said that, in the context of the Ukrainian
    crisis, cyber-attacks targeting critical infrastructure, Romanian ministries
    and agencies, has increased.


    CRISIS IN UKRAINE -
    On Wednesday, Ukraine’s president, Volodymyr Zelensky, signed a decree calling
    up reservists aged 18 to 60. Kiev has also urged the West to impose additional
    sanctions against Russia, which should target the economy and president Vladimir
    Putin’s inner circle. The USA adopted what president Joe Biden has called a
    first series of sanctions in response to Moscow recognizing the separatist
    republics in Ukraine. We’ve cut off Russia’s government from Western funding,
    the White House leader said, adding that additional sanctions will target the
    Russian elites and members of their families. The US president described the
    latest developments as the beginning of a Russian invasion, saying that an
    American battalion and several F-35 state-of-the-art jets will be deployed this
    week to the Baltic region and in Eastern Europe. Troops will be sent to
    reinforce NATO’s eastern flank, not to fight Russia, president Biden also
    argued.


    ROMANIA-GREECE RELATIONS -
    President Klaus Iohannis on Wednesday met in Bucharest Greece’s Prime Minister,
    Kyriakos Mitsotakis. The two officials reiterated their strong support for the
    territorial integrity of Ukraine, condemning the actions of the Russian
    Federation as violations of international law. The two also underscored the importance
    of maintaining close cooperation at both EU and NATO levels. The meeting also
    highlighted the excellent relations between the two countries, boosted by a
    series of factors such as strong economic cooperation, an interest in expanding
    sectorial cooperation, stepping up mutual investment and implementing energy
    and infrastructure interconnection projects. President Iohannis hailed the
    signing of a Joint Declaration on strengthening bilateral cooperation, a
    document signed by the prime ministers of Romania and Greece on this occasion.
    Prime Minister Mitsotakis expressed his gratitude for the support Romania provided
    in extinguishing last summer’s wildfires.


    COVID-19 – Romania reported on Wednesday 11,477 new
    cases of Covid-19 and 119 related deaths, of which 9 from a previous date. Of the
    nearly 9,000 Covid patients treated in hospital, a little over 1,000 are in
    intensive care. In terms of vaccination, about 1,000 people had the first shot
    in the last 24 hours. The Omicron variant becomes quasi-dominant in Romania,
    with over 95% of the results indicating infection with this strain of the
    virus, Health Minister Alexandru Rafila said. In his opinion, in about three
    weeks the number of infections nation-wide could go down, with hundreds of new
    daily cases being expected instead of thousands, as is the case now. Minister Rafila
    also said a 6th wave of the pandemic is out of the question right
    now.


    INFLATION – The annual inflation rate in the EU
    increased in January up to 5.6%, from 5.3% in December 2021, according to data
    made public by the Eurostat on Wednesday. The member states with the highest
    inflation rates are Lithuania (12.3%), Estonia (11%) and the Czech Republic
    (8.8%). As compared to the situation in December 2021, the annual inflation
    rate in the first month of 2022 went down in 8 member states and increased in
    19 countries, Romania included, from 6.7% to 7.2%. Romania ranks 11th
    among the countries with the highest annual inflation rates. The countries with
    the smallest annual inflation rates are France (3.3%), Portugal (3.4%) and
    Sweden (3.9%).


    FUEL – Ruling coalition parties have agreed to temporarily
    cut the fuel excise by 50%. The measure reduces by 1 RON the retail price of
    petrol and diesel, Finance Minister Adrian Câciu has said. The proposal was supported by the
    Social Democrats, while their leader, Marcel Ciolacu, said the solution is
    aimed at preventing prices from going up. In turn, Liberal leader Florin Cîțusaid his
    party agrees, in principle, with any measure that reduces the fiscal burden,
    but added that, if the retail price of fuel does not go down, somebody will
    have to take responsibility. The National Liberal Party (PNL), the Social
    Democratic Party (PSD) and the Democratic Union of Ethnic Hungarians in Romania
    (UDMR) have also agreed to further subsidize electricity and natural gas bills
    in the month of April. (EE & VP)