The Analysis of Inflation Rate Dynamic in Central and South-Eastern Europe’s States in the Context of The EU Accession

Abstract

In the year 2004 ten states from Central and South-Eastern Europe joined the European Union. The majority of them have registered a significant consumer price increase in the year 2004. The goal of this paper is to examine the fundamental factors that have influenced inflation rate after EU accession and to analyse the causes of the inflation differential in EU member states which acceded in 2004. The impact of EU accession was different in analysed countries, the increasing of inflation rate in accession year being determined by the adoption of the Common Agricultural Policy, the harmonization of the structure and rates of indirect taxes, the introduction of the Common Customs Policy, the free movement of goods, the free movement of capital and the expected inflation.

From the analyses we have done, we have remarked that the main cause of inflation differential has been the oil price on the international market, because of the different degree of dependence on oil import of these countries, but also on the different weight of electricity, gases and other fuels in the consumer basket.