2008 inflation rate falls short of expectations, to 6.30%

BNR adopted inflation targeting in 2005 and managed to acquire its objective in only one year, 2006, respectively, when the annual inflation rate at yearend, of 4.87% was below the announced target of 5% with 1% tolerance band.

In 2005, BNR missed by narrow margin the inflation target, and in 2007 the annual inflation was significantly above the 4% target, with 1% tolerance band.

For 2008, BNR has set a 3.5% inflation target, with 1% tolerance band. However, analysts warned that a new failure of the inflation target could peril Romania’s adoption of euro currency in 2014, which means accession to ERM 2 exchange rates in 2012.

After the publication of data on inflation, the local currency slumped to roughly 4.3 against euro, nearing to all-time lows.

The annual inflation rate fell to 6.30% at the end of last year, from 6.74% in November, according to an INS report, the level being below analysts’ estimates, as the decline of sales has lowered the price of non-food products in December 2008.