The disinflation process in Romania within the context of the European integration

The accomplishment of a high rank of stability of prices represents one of the conditions of the euro currency,therefore inflation represents one major problem for the Romanian monetary authorities.Under these conditions toknow the factors that lead to inflationary pressure is necessary in taking monetary policy decisions.This paper analysesthe inflation process in Romania after 1990.The purpose is to identify the most important causes which have determinedthe inflation development in our country. Given the evolution of the inflation rate, we study the inflation phenomenonover the period 1990-1999 (the inflation process) and 2000-2009( the desinflation process). Although, in Romania therehas been a powerful disinflationary phenomenon, the consumer price has risen very much in the first years ofdisinflation process. The increase of inflation in the first decade is determinated by the price deregulation, the wageincrease which overcome the increase in labour productivity and the Romanian leu currency devaluation compared toUS dollar.In order to achieve my objectives for this paper, I have used monthly data from 2000-2009, using theunifactorial model of regression.The results show that inflation in the period 2000-2009 is determined by wageincrease, M2 money supply variation, the exchange rate variation and the international oil price.