Wednesday, November 10, 2010

Romanian Inflation Quickens to 7.9% as VAT Boosts Prices for Fourth Month

Romania’s inflation rate rose for a fourth consecutive month in October as the lingering effects of a 5 percentage-point increase in the value-added tax pushed prices higher throughout the economy.

The rate advanced to 7.9 percent, the highest since August 2008, from 7.8 percent in September, the Bucharest-based National Statistics Institute said today in an e-mail. On the month, prices advanced 0.55 percent.

Romania raised VAT to 24 percent in July to meet a budget deficit target of 6.8 percent of gross domestic product for this year and 4.4 percent for 2011. The country turned to the International Monetary Fund and the European Union for a 20 billion-euro ($27.6 billion) bailout during the worst recession in 20 years.

The central bank on Nov. 4 raised its inflation forecast to 8.2 percent for this year and 3.4 percent for 2011. That compares with August estimates of 7.8 percent and 3.1 percent.

Food price inflation accelerated to an annual 5.5 percent in October compared with 4.8 percent in September, the institute said. Prices for services rose an annual 6.1 percent, compared with 6.4 percent in September, and non-food prices gained 10.6 percent, compared with 10.7 percent the previous month.

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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