Monday, November 12, 2012

Romania Inflation Unexpectedly Slows on Food, Fuel Costs

Romanian inflation unexpectedly slowed in October for the first time in five months as falling food and fuel costs offset rising prices for services boosted by a weaker leu.

The inflation rate fell to 5 percent, compared with 5.3 percent September, the Bucharest-based National Statistics Institute said today. The median estimate of 13 economists surveyed by Bloomberg was 5.3 percent. Prices grew 0.3 percent from the previous month.

Romania’s central bank lifted its inflation forecast for this year to 5.1 percent, above its target range of 2 percent to 4 percent, due to a jump in food prices. It also raised its 2013 inflation outlook to 3.5 percent from a previously predicted 3 percent, Governor Mugur Isarescu said on Nov. 7.

Policy makers kept the key rate unchanged at a record-low 5.25 percent on Nov. 2 amid a faltering recovery and turned to other means to tighten policy, such as limiting weekly lending to commercial banks, as inflation accelerates.

“We expect year-on-year inflation to display an upward trend during the remainder of 2012, ending the year at around 5.7 percent, well above the target and the bank’s recent projection,” Citigroup Inc. economists Ilker Domac and Gultekin Isiklar said in an e-mailed note before the release.

Food-cost growth slowed to 6.1 percent in October from a year earlier, compared with 6.9 percent in September. Inflation for non-food items decelerated to 4 percent, compared with 4.3 percent in September, as fuel prices dropped, the report showed.

Service-price growth quickened to 4.9 percent, compared with 4.8 percent in September, as a weaker leu boosted rent and telephone prices gauged in euros, the institute said.

-- With assistance from Barbara Sladkowska in Warsaw. Editors: Jeffrey Donovan, Andrea Dudik

To contact the reporter on this story: Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

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