Monday, September 12, 2011

Romanian August Inflation Rate Declines to Lowest in 17 Months

Romania’s inflation rate fell more than economists expected in August to the lowest in 17 months as a bumper harvest boosted food stocks and the effect of a government tax increase faded.

The rate fell to 4.25 percent from 4.85 percent in July, the lowest since March 2010, the National Statistics Institute in Bucharest said today in an e-mailed statement. August inflation was estimated at 4.6 percent, according to the median forecast of nine economists surveyed by Bloomberg. Consumer prices fell 0.35 percent on the month.

Eastern European central banks including Romania have left borrowing costs unchanged in the past quarter amid concern about the economic impact of the debt crises in Europe and U.S. Romania’s central bank lowered the inflation forecast for this year and next on Aug. 8.

Romania’s central bank targets an inflation rate of 3 percent, plus or minus 1 percentage point, for this year and next and expects the rate at 4.6 percent at the end of the year. The International Monetary Fund forecasts a 5.5 percent rate for the year, the lender’s mission chief to Romania, Jeffrey Franks, said on Aug. 1.

Romanian policy makers kept the benchmark interest rate unchanged at 6.25 percent, the European Union’s highest, for a 10th meeting on Aug. 3, saying “a continued prudent stance” is needed to boost a recovery and contain medium-term inflation risks stemming from possible government-energy price increases.

Food-price growth slowed to 3.8 percent in August from a year earlier, compared with 5.7 percent in July, on falling vegetable and fruit prices, the institute said.

Non-food costs fell to 4.9 percent in August from 5 percent the previous month, while price growth for services accelerated to 3.5 percent from 3.1 percent in July on increased public transport costs and rising water bills, the institute said.

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

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