Relative labor shortages continue to give workers greater bargaining power, says BNR Governor Mugur Iserescu.

According to him, this is happening not only in Romania.

“I recently attended an international seminar in Dubrovnik (Croatia), organized with the support of the IMF. The message of the Fund’s specialist is to prepare for inflation associated with rising wage costs,” he said.

He also stated that this is “quite dangerous inflation, because it is not easy to fight with it.”

“This is a warning about the future evolution of prices not only in Romania, but also in Europe in general,” the governor of the BNR also said.

Only an increase in direct taxes leads to an increase in inflation / An increase in income tax reduces aggregate demand

“Only some increased taxes lead to an increase in inflation, namely direct taxes on consumption: excise duties and VAT. An increase in income tax, for example, can even have the opposite effect. It is more difficult to calculate. An increase in income taxation leads to a decrease in aggregate demand,” the Governor of the BNR also stated.

• “You raise income taxes, people earn less, aggregate demand falls. Depending on aggregate demand and aggregate supply, prices may even go down if you raise income taxes.”

“I made one thing very clear: this forecast, the inflation forecast, is subject to uncertainty. We do not know what the program will ultimately be, nor the implications of these measures for limiting commercial supplementation. Our inflation forecast suffers because of the uncertainty. It goes up and down,” he explained.