Tuesday, March 9, 2010

Romania Inflation Rate Fell as Leu Strengthened, Survey Shows

By Adam Brown

March 9 (Bloomberg) -- Romania’s inflation rate probably fell in February as a stronger currency pushed down prices of imports and other items sold in euros, according to a survey.

The annual inflation rate fell to 4.7 percent in February from 5.2 percent in January, according to the median estimate in a Bloomberg survey of nine analysts. The monthly rate probably fell to 0.3 percent from 1.7 percent, it showed. The statistics office publishes inflation data tomorrow at 10 a.m. in Bucharest.

“The stronger leu probably helped slow inflation last month,” Vlad Muscalu, a Bucharest-based analyst at ING Bank Romania, said in a telephone interview today. “We will probably see lower inflation rates for the next few months.”

Romania’s leu has strengthened 3.4 percent against the euro this year, reducing prices of imports and items such as telephone bills, rent and gasoline.

Inflation accelerated from October of last year through January as tobacco and alcohol producers raised prices in anticipation of a new tax that took effect on Jan. 1. Tobacco accounts for 4.6 percent of the basket of goods in the consumer price index.

The Banca Nationala a Romaniei raised its year-end annual inflation forecast last month to 3.6 percent from 2.6 percent and cut its main interest rate to 7 percent from 7.5 percent to spur economic growth. The bank next meets to decide on its interest rate on March 29.

--With assistance from Zoya Shilova in Moscow. Editor: Tasneem Brogger.

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net

To contact the editor responsible for this story: Chris Kirkham at ckirkham@bloomberg.net

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