Wednesday, May 11, 2011

Romanian April Inflation Quickens to Fastest in Almost 3 Years

By Irina Savu - May 10, 2011

Romania’s inflation rate rose to the highest in almost three years in April, more than economists had forecast, driven by surging food and fuel prices and higher domestic electricity costs.

Inflation accelerated to 8.3 percent, the fastest since July 2008, from 8 percent in March, the Bucharest-based National Statistics Institute said today in an e-mailed statement. The median estimate in a Bloomberg survey of six economists was 8.2 percent. Prices increased a monthly 0.7 percent.

Policy makers from China to Brazil have been struggling to tame quickening inflation as the global economic recovery and conflict in the Middle East drives up energy and food prices. Romanian central bankers are trying to lower domestic prices boosted by a government increase in a value-added tax rate last year and global prices, while aiding an economic recovery.

“We expect inflation to drop dramatically to about 5.2 percent in July once the first-round effect of the VAT rate hike fades away entirely, and then move toward 5.0 percent by the end of the year,” Citigroup Inc. economists Ilker Domac and Gultekin Isiklar wrote in a note to clients before the release.

Food-price inflation accelerated to an annual 10.9 percent in April, compared with 9.9 percent in March, sparked by higher bread, potato, fruit and sugar prices, the institute said.

Non-food prices rose 7.7 percent, compared with 7.4 percent in the previous month, boosted by rising tobacco, fuel and electricity prices. Price growth for services slowed to an annual 4.8 percent, compared with 5.7 percent in March, as a stronger currency lowered rent and telephone prices.

“Food and commodity prices, along with the possibility of administrative price adjustments, remain the main uncertainties on the inflation front,” Isiklar and Domac said.

Romania’s trade deficit narrowed in March to 806 million euros ($1.1 billion) from 929 million euros a year ago on surging exports boosted by demand from western Europe, the statistics institute said in a separate statement today. The gap was a revised 407.6 million euros in February.

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 at jagomez@bloomberg.net

1 comment:

whocares said...

Romania should use its possibility to devaluate the Lei and start the devolepment of winning more oil and gold that they have in there ground, but also starts with educating there citisens how to do business in a free economie. Some how Romania dont realise its unique location inside the EU. I know that Romania wants the euro in januari 2015, but they shouldnt get drunk becouse of that. Even the most strongest countries wont make it with the euro because the euro cant devaluate, because of that it became impossible to keep controll over the economy of there country.