Thursday, June 10, 2010

Romania Inflation Rate Rose to 4.4% in May as Currency Weakened

By Irina Savu

June 10 (Bloomberg) -- Romania’s inflation rate rose in May for a second month as a weaker currency drove up the costs of goods priced in euros.

The rate rose to 4.4 percent in May from 4.3 percent in April, the Bucharest-based National Statistics Institute said in an e-mail today. The result was in line with the median estimate of seven analysts in a Bloomberg survey. Consumer prices rose 0.2 percent in the month.

“The main driver of inflation in May is the depreciation of the exchange rate, which surely boosted telephone bills and other services prices,” ING Bank Romania Chief Economist Nicolaie Alexandru-Chidesciuc said before the release.

The leu weakened 1.6 percent against the euro and 9.7 percent against the dollar in May on mounting concern that the European sovereign-debt crisis is spreading. In Romania, gasoline, telephone bills and other items are gauged in euros and paid for in lei, linking price growth to currency swings.

Prices of services, the most vulnerable to a leu depreciation, rose an annual 0.5 percent in May, while food- price inflation fell 0.1 percent, according to the institute.

Inflation accelerated from October through January as tobacco and alcohol producers raised prices in anticipation of a new tax that took effect on Jan. 1. Tobacco accounts for 4.7 percent of the basket of goods in the consumer price index.

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