Monday, October 4, 2010

Romanian Producer Prices Rose 6.7% on the Year in August on Tax Increase

Romanian producer prices grew in August after the government increased the value-added tax by 5 percentage points to meet the terms of an international bailout loan.

The cost of goods leaving mines and factories advanced an annual 6.7 percent, after jumping 6.9 percent in July, the Bucharest-based National Statistics Institute said in an e-mail today. Prices increased 0.4 percent from the previous month.

Romania, which is relying on a 20 billion-euro ($27.5 billion) bailout to stay afloat amid its worst recession in 20 years, raised the VAT to 24 percent from July 1 to meet an International Monetary Fund-mandated budget-deficit target. The tax increase boosted inflation to 7.6 percent in August, the fastest in two years, from 4.4 percent in June.

Producer prices for manufactured goods rose an annual 7.6 percent in August, compared with a gain of 8 percent in July, according to the institute. Prices of mined goods rose 2.5 percent after advancing 3.8 percent the previous month, while electricity and gas rose 2.9 percent in August, according to the statement.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez in Prague atjagomez@bloomberg.net

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