Romania’s Aug CPI -0.09% MM, Annual Inflation Slows To 8.02%

It is for the first time this year when Romania reported deflation and for the second time since the fall of the communist regime in 1990. In August 2006, prices were down 0.07% on the month, following a decrease in prices for food products.

In August this year, the deflation was the result of a 0.9 decrease in prices for services, following lower tariffs for telephony, air transportation, and post office services.

Despite a good agricultural year, food products reported a 0.2% increase in prices, boosted by a 1.97% increase in potatoes prices and 1.7% increase in prices for cheese. Eggs reported a rampant 6.2% increase on the month.

However, prices for fresh fruits fell by 5.38% on the month.

Prices for non-food products were flat on the month. Of non-food products, prices for fuels were down 0.77% on the month, while prices for cars reported a 1.07% monthly decrease.

In August annual inflation stood at 8.02%, falling by more than one percentage point from 9.04% the month before.

Last month, the central bank revised upwards its inflation projections for 2008 and 2009, citing pressures from a rampant economic growth but also from wage increases and expected pension increases.

The central bank sees inflation at 6.6% at the end of this year and at 4.2% at the end of 2009, compared with a target of 2.8%-4.8% and 2.5%-4.5% for 2008, and the following year, respectively.