(Bloomberg) -- Romania’s inflation eased to the lowest level in three years, giving the nation’s central bank more bandwidth to resume a recently-paused monetary easing.
Consumer prices rose at an annual rate of 4.6% last month, compared with 5.1% in August, the statistics office in Bucharest said Friday. That’s slightly below the 4.7% median estimate in a Bloomberg survey of economists. Prices rose 0.3% from the previous month.
Romania’s central bank held borrowing costs steady after two consecutive interest-rate cuts earlier this month as policymakers weigh the risks that the government’s ballooning deficit could have on prices and the economic outlook. Rate setters will hold their next meeting in early November, just weeks before presidential and parliamentary elections.
The extra budget spending has also contributed to “a strong persistence of underlying inflationary pressures,” according to Nicolae Covrig, a Bucharest-based economist at Raiffeisen Bank. “We expect the disinflation process to take a pause in the coming quarters.”
Inflation could climb to as much as 6% in the first half of next year if the government’s deficit-reduction efforts involve an increase in the value-added tax, the economist said.
--With assistance from Barbara Sladkowska.
©2024 Bloomberg L.P.
