Romania Inflation


Romania: Inflation moderates in November

December 10, 2010

In November, consumer prices increased 0.52% over the previous month, which was below October's 0.55% rise. The increase mainly reflected higher food prices , while prices for services decelerated. Annual headline inflation dropped from 7.9% in October to 7.7% in November, the first decline in five months, as weaker consumer demand partly offset the effects of the July VAT increase. The figure came in below market expectations of a 7.8% increase. In contrast, annual average harmonised inflation (based on the harmonised index of consumer prices - HICP) increased from 5.5% in October to 5.8% in November. Despite the surge in inflation observed during the last months, the Board of the National Bank of Romania (NBR) decided to keep the monetary policy rate unchanged at 6.25% for the fifth consecutive month on the 2 November meeting. The next policy meeting is scheduled for the 5 January. The Central Bank has a 3.5% inflation target for this year and 3.0% for 2011 with a 1.0 percentage point tolerance margin but acknowledges that it is unlikely to meet the target this year. In fact, the Central Bank forecasts inflation to reach 8.2% by the end of this year, before slowing to 3.4% in 2011.


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