CONSTANTIN CHIRCĂ, NBR:  "Services could weigh more in the calculation of inflation"

The services group may see a greater weight in the future in the structure of the consumption basket. Starting with 2013, Romania will align to the European regulations concerning the calculation of inflation, said Constantin Chircă, head of the Statistics Department of the National Bank of Romania (NBR), at the EU-COFILE seminar, hosted by the NBR, Alpha Bank and the Romanian Banking Association (ARB).

"Starting next year, the National Statistics Institute will change the methodology used for calculating inflation to harmonize it with the other countries in the European Union. Right now, Romania is the only country which is uses the method of average household spending instead of the national accounts".

The NBR official added that the structure of the consumer basket on the average household, will no longer be determined based on family expenses, but also using national accounts.

Compared to other countries in the European Union, the weight of food expenses in calculating inflation is 37%, much higher than the EU average.

Constantin Chircă also said that at the present time, the structure of the average expenses in an average household is used, which means that certain basic goods have much greater weight than they do in real life, and the expensive products or services are not recorded or they have very little weight in the calculation of inflation.

The NBR official said that the polls concerning the budgets of families are run on a sample of 10,000 households which are representative on a national level, and self-consumption and expenses with the own output aren't being taken into account.

The inflationary shock of September, when the monthly rate was 1.18%, will be felt until August 2013, and this evolution has caused the Central Bank to revise the inflation target for this year as well, according to Constantin Chircă.

He said: "The inflationary shock of September 2012 will extend another 11 months, until August 2013. The reason for the revision of the inflation forecast, from 3.2%, to 5.1% by the National Bank of Romania, is the fact that the monthly inflation rate has remained at a high level, of 1.18%, all throughout 2012".

The NBR official explained that seven groups of food products, which hold a weight of 6% in the total CPI, had a contribution of 5.92%, in the average total increase of the consumer prices.

In October, the prices of services have increased 0.87% compared to September, as prices of telephony and air transport services increased 1.29%.

The annual inflation rate fell below 5%, as consumer prices increased 0.29% in October. In October, the annual inflation rate reached 4.96%, down from 5.33% in September, which represented this year's high.

The Romanian National Bank (NBR) has revised the inflation forecast upwards by 1.9%, from 3.2 to 5.1%, more than 1% above the upper limit of the target interval, while also raising the forecast for 2013 from 3% to 3.5%.