The government’s decision to eliminate heating subsidies to the population starting this year will have an impact over this year’s inflation rate that already reached 8.3% in April, IMF chief of mission in Romania said quoted by news agency Mediafax. He estimates that the impact on inflation will be 0.5 percentage points.
To estimate an increase of inflation by half of percentage point is not unreasonable, Franks said in an interview for Reuters. He said that in May the central bank in Romania might be compelled to change its monetary policy to ensure the inflation target for next year will be respected. Reuters notes that Romania applied last year tough austerity measures including salary cuts and VAT increases that increased inflation.