» » Romania Inflation Rises Slightly In April

Romania Inflation Rises Slightly In April

(RTTNews) – Romania’s consumer prices inflation remained relatively stable at 4.28% year-on-year in April compared to 4.2% in March, data from National Institute of Statistics showed Tuesday.

Economists were looking for a rate of 4.3%. The rate was well above the central bank’s 2010 target of 3.5%. The bank has set its inflation target for 2011 at 3%. Food prices declined 0.21% on an annual basis, while prices in services rose 3.32%.

On a monthly basis, inflation rose to 0.35% from 0.22% in March. Economists had expected an increase of 0.4%.

Month-on-month, food prices rose 0.02% and services costs were up 0.47% monthly. Prices of non-food goods rose 0.56% monthly.

The consumer price index excluding alcoholic beverages and tobacco rose 0.38% monthly, while the CPI leaving out fuels rose 0.3%. Stripping out prices of prices of vegetables, fruit, eggs, oil and products as well as beverages and tobacco, prices rose 0.21% from the previous month.

Tuesday, the IMF said Romania may see a delayed recovery in the backdrop of the recent turmoils in the European financial markets. The lender believes that there will be a further increase in the number of unemployed during 2010 before unemployment begins to turn around in the fall.

The registered unemployment rate rose to 8.4% in March from 8.3% in February as several companies operating in Romania reduced workforce, wages and production amid the global recession. Meanwhile, the government is planning to cut 100,000 jobs this year.

On May 4, Romania’s central bank had lowered its monetary policy rate to a new record low of 6.25% from 6.5%. The bank had concluded that the analysis of changes in macroeconomic indicators showed continuation of the disinflation and rising annual rates of growth of exports. “At the same time, there is persistence of both aggregate demand deficiency and the decrease in annual terms of credit to the private sector,” the bank said in a statement.

The bank also pointed to a relative risk associated with the uncertainty concerning the external economic environment in terms of recent tensions caused by the crisis of public finances in Greece and warned that this, among other factors, may complicate prospects for recovery of the Romanian economy.

Romania suffered its worst recession in 2009 and the economy contracted 7.1% in 2009. The country had received a EUR 20 billion aid package led by the IMF to support the economy.

Last week, Romania unveiled new austerity measures to meet its fiscal target set by the IMF and avoid a Greece-style crisis scenario. President Traian Basescu said the hefty spending cuts were “inevitable”. Public sector wages – including the minimum one – will be cut 25%, while jobless pensions and benefits will be cut 15%.

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