Thursday, January 12, 2012

Romania December Inflation Rate Falls to Lowest in Two Decades

By Irina Savu

Jan. 11 (Bloomberg) -- Romania’s inflation rate fell to the lowest level in two decades in December, meeting the central bank’s target for the first time in five years, as a bumper harvest eased food prices.

The rate fell to 3.1 percent from a year earlier from 3.4 percent in November, the Bucharest-based National Statistics Institute said today in an e-mail. The median estimate of eight economists surveyed by Bloomberg was for a 3.3 percent rate. Prices rose 0.2 percent on the month.

Romanian policy makers cut the main interest rate by a quarter of a percentage point for the second time in a row this month to 5.75 percent, as record-slow inflation made room for lower borrowing costs to boost economic growth in the export- reliant country.

The inflation rate may fall to less than 2 percent by March and be at about 3 percent by the end of this year, central bank Governor Mugur Isarescu said on Nov. 7.

Food-price growth slowed to 0.95 percent in December from a year earlier, compared with 1.4 percent growth in November, on lower fruit and vegetable prices, the institute said.

Non-food costs rose 4.45 percent from a year earlier last month, mainly driven by higher heating bills, compared with 4.9 percent in November, the institute said. Service-price growth quickened to 4.2 percent from 4 percent in the previous month, on higher railway and water prices, according to the institute.

--With assistance from Barbara Sladkowska in Warsaw. Editors: James M. Gomez, Douglas Lytle

ROCOPYOY@US ROCOPMOM@US

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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