Isarescu misses inflation target

Annual inflation rate climbed in December to 4.74% after consumer prices rose 0.32% from November, in line with economists’ forecasts, according to data provided by the National Institute of Statistics. The central bank has thus missed target for the third year in a row.

The National Bank of Romania’s inflation forecast was 3.5% with -/+1% tolerance band. In November, NBR has raised its inflation estimates from 4.3% to 4.5%, on price rises generated by tobacco excises, the central bank governor said.

Consumer prices increased by 0.32% in December from a month earlier, led by non-food products (+0.54%) and food products (+0.34%). Services rose 0.25%.

The biggest price rises were recorded in: eggs - 4.63%, tobacco - 3.58%, vegetables and canned vegetables - 2.69%, water supply, sewerage and waste management – 1.13%. Fuels dropped 0.29% in December.

The National Bank of Romania implemented inflation targeting policy in 2005 and met its inflation goals only in one year, in 2006, when the annual inflation rate came in at 4.87%, below the 5% target.

In 2005, the central bank missed its inflation target by narrow margin and in 2007 when it stood at 6.57% it fell short of estimates at wide margin from NBR target of 4% with +/-1% tolerance band.

At the end of 2008, the annual inflation rate stood at 6.3%, considerably above the 3.8% target.

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