Tuesday, March 13, 2012

Romanian Inflation Rate Falls Less Than Forecast on Cold Weather

Romania’s inflation rate dropped less than economists estimated in February as heavy snow and freezing temperatures disrupted transport and supplies, limiting price decreases.

The inflation rate dropped to 2.6 percent, a post-communism low, from 2.7 percent in January, the National Statistics Institute in Bucharest said today by e-mail. The median estimate of 10 economists surveyed by Bloomberg was 2.4 percent. Consumer prices rose 0.6 percent in the month.

A record-low inflation rate made room for policy makers to cut the benchmark interest rate three times since November to a record-low 5.5 percent as they seek to buoy the economy as Europe grapples with a debt crisis. The central bank is easing borrowing costs “in small steps to keep from harming the equilibrium,” Governor Mugur Isarescu said Feb. 7.

Romania’s economy may post its second quarterly contraction and “enter a technical recession” in the first quarter because of the cold weather, Finance Minister Bogdan Dragoi said on March 9.

Food prices fell 0.4 percent from a year earlier in February, compared with 0.1 percent growth in January, the institute said. The prices grew 1.2 percent from a month earlier as a cold snap cut electricity, damaged infrastructure and disrupted supply chains across the country.

Price growth for non-food items quickened to 4.1 percent from a year earlier, because of higher tobacco and fuel costs, compared with 4 percent in January, according to the institute. Service-price growth accelerated to 4.8 percent from 4.7 percent the previous month, 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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