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BNR's governor Isarescu: Fiscal, income uncertainties will trigger inflation up

Uncertainties over the budget construction in 2017, determined by pieces of legislation at various stages of being passed by Parliament, included, are in the opinion of the National Bank of Romania (BNR) risks that move the consumer prices up in the period immediately ahead, while as regards the foreign markets, administered prices and prices for raw materials will move inflation down, says the BNR Governor, Mugur Isarescu. 

'As regards the fiscal and the income policy's behavior, the budget execution is positive so far, but possibility exists that the budget execution of the current year will vary from the one foreseen in the basic scenario,' Isarescu told a conference on Thursday where he presented BNR's quarterly report on inflation. 

At the same time, the central bank's head considers that 'uncertainties regarding the budget construction in 2017, also determined by pieces of legislation at various stages of adoption by Parliament are a risk for growing inflation. 

On the other hand, developments in prices for raw materials prices on the international markets (food, energy) and the dynamic of the administered prices would act to decrease prices, conditional upon available information, and the uncertainties over the magnitude of price increases in natural gas and electricity, as well as the extension of the reduced Value-Added Tax (VAT) to electricity and natural gas. At the same time, external factors will act on tempering inflation, added Isarescu.