NBR likely to miss inflation target, ING says

The annual inflation rate is likely to come in at 5% in 2010, on growing excises, food and drug prices. Therefore, the central bank may miss its inflation target for the fourth year in a row, ING said in a report.
“Inflation rate will most likely stay high in 2010 (approximately 5% at the end of the year) and the National Bank of Romania may miss its target again. Our forecasts is opposite to a Reuters median forecast of 4.1% at the end of the year”, ING said.

NBR has set an inflation target range of 2.5 – 4.5%.

ING expects inflationary pressures to persist through the remainder of the year, but with a limited impact in the first half and stronger in the second half.

“Should the natural gas prices hold steady in 2010, year-end inflation will be 0.3% below our forecast”.

At the end of last year, the annual inflation rate came in above the 2.5-4.5% target range to 4.74%, from 6.3% at the end of 2008.

ING analysts also expect a slight appreciation of the leu over its European counterpart by around 3%, which could weigh on inflation.

If the leu’s gain will be higher than estimated, the annual inflation may come in near the upper target limit (4.5%).

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