Foodstuffs remain the driver of price growth, keeping inflation at the same level as last month (9.4%), despite efforts by the NBR to reduce inflation.

This time the prices of sugar, thermal energy, detergents, margarine and eggs rose the most. True, compared to August 2022, the price of oil has fallen slightly, but the price of a liter of oil remains high.

It should be noted that a decrease in inflation does not mean a drop in prices, but only a slowdown in their growth rate.

Such growth rates of food prices have not been seen for 20 years, since 2002-2003.

Inflation will reach 7.5% at the end of the current year before falling to 4.4% in December 2024 and 3.8% in June 2025, the BNR explained in its latest Inflation Report.

At the same time, Central Bank economists say, inflation expectations are on a downward trajectory, but with values ​​that remain above the target range. Relatively constant pressure in 2023 will arise from the prices of imported goods.

The measure regarding the temporary restriction of commercial additives to basic food products, provided for in the PNP No. 67/2023, will not have a significant impact on the dynamics of prices for these products, according to the BNR

What is happening in other European countries

In 10 European countries, inflation decreased (albeit slightly), while in other countries it increased (the largest increase was observed in Luxembourg, where the inflation rate increased from 2% in July to 3.5% in August).

Countries where inflation increased in August (which released Eurostat data on Wednesday morning): Spain, Ireland, Slovenia, Croatia, Austria, Cyprus, France, Belgium, Portugal, Luxembourg. Obviously, Romanian imports from these countries go togetherrelevant importinflation

Countries where inflation is falling: Estonia, the Netherlands, Latvia, Finland, Italy, Lithuania, Slovakia, Malta, Greece and Germany

Using AI in Inflation Estimation

The Federal Reserve System of the United States has published interesting jobof two economists, Miguel Faria e Castro and Fernando Leibovici, who used artificial intelligence to forecast inflation.

For the first time, the pair used artificial intelligence to test inflation forecasts for 2019-2023 and compared them to estimates from the Philadelphia Fed survey and actual inflation. The bottom line is that artificial intelligence made more accurate estimates than “human” economists. As for the future development of inflation in the US, the “robots” estimate that the goal of 2% will be achieved more slowly than the Fed bankers expect.

What’s next in Europe and, by ricochet, in Romania

The EU economy may grow more slowly, by just 0.8% this year, according to data released by the European Commission on Monday, with the institution cutting growth estimates and signaling that inflation would remain subdued.

“The EU economy lost momentum in the spring,” said Paolo Gentiloni, the EU’s economy commissioner. “Economic activity stagnated in the second quarter and indicators point to a slowdown in the coming months.”

The new data forecast a 0.4% drop in Germany’s real gross domestic product, compared with previous expectations for a 0.2% increase. “In general, when the largest economy in the Union has somewhat negative growth, it affects everyone,” Gentiloni added. For Romania, this means a decrease in export demand or a slowdown in the activity of exporters.

Tomorrow, the European Central Bank, in turn, may take a new decision on monetary policy to raise interest rates, which will lead to higher bank rates for Romanians with loans in euros.

Europe’s economic outlook has worsened in recent months due to falling manufacturing, worsening trade with China, cuts in support measures from European governments and reduced consumer spending due to high inflation and rising rents, utilities and bank rates.