Romania Inflation


Inflation hits two-year high in December

In December, consumer prices increased 0.53% over the previous month, which was virtually unchanged from the 0.52% rise recorded in November. The increase mainly reflected higher prices for food and non-food items, while services remained virtually unchanged. Annual headline inflation increased from 7.7% in November to 8.0% in December, the highest level since September 2008. The surge in inflation continues to reflect July's 5 percentage-point increase in the VAT, which boosted prices throughout the economy. That said, the figure came in below the Central Bank's November forecast of 8.2% and overshot the Bank's 2010 3.5% inflation target by a wide margin. Despite the level of inflation steadily rising, at its 5 January meeting, the Board of the National Bank of Romania (NBR) left the monetary policy rate unchanged at 6.25%, where it has remained since May last year. The next policy meeting is scheduled for 3 February. The Central Bank has set a 3.0% inflation target for this year with a 1.0 percentage point tolerance margin, and expects inflation to end the year at 3.4%.


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