♦ The main driver of inflation, according to BNR reports and data from Statistics, is non-food goods and services. In other words, the population is buying more non-food goods and services than last year, both in volume and value, which causes their prices to rise ♦ At the same time, interest rates are at their highest in recent years.
Inflation, the generalized increase in prices, can increase for several reasons, be they monetary, fiscal or related to supply and demand. With interest rates above inflation already for two months, the increase in prices is still high and in March Romania still had the highest inflation in the European Union, triple the average of EU member states. Why is inflation not giving way in Romania, while in other European countries the increase in prices has reached almost zero, and the average inflation in the EU is textbook?
It is a matter of demand, which comes mainly from the increase in real incomes, it is clear from the graphs presented by the representatives of the National Bank of Romania (BNR), but inflation also comes against the background of fiscal changes since the beginning of the year, costs that companies have tried to transfer into prices.
The NBR’s tool in the fight against inflation is monetary policy, with the main weapon being the key interest rate. At the moment, the key interest rate in Romania is at 7%, while inflation is below this indicator. However, although, according to economic theory, inflation should decrease as a result of the decrease in lending, and therefore consumption, the increase in prices accelerated in January 2024, and in the following months it decreased, but very little.
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