Romania's annual inflation rate rose in December after the government raised energy prices to bring tariffs closer to those in the European Union, which the country joined this month.
The rate rose to 4.9% in December from a record low of 4.7% in November. Consumer prices gained 0.7% on the month, the National Statistics Institute said today in an e-mailed statement in Bucharest. The data were in line with the median estimates of six economists surveyed by Bloomberg. Inflation in Romania, as high as 256% in 1993, has slowed partly because the central bank has kept borrowing costs high.
December's inflation compares with an average of 2.1% in the European Union, which Romania joined on January 1 along with Bulgaria. „The better-than-expected inflation in 2006 reflects to some extent the cautiousness of the central bank and the government, who wanted to prove its commitment to the EU ahead of accession,” said Radu Craciun, head of research at ABN Amro Bank Romania. Romania, which at the beginning of this year had the highest inflation rate among EU candidates including Croatia, Bulgaria and Turkey, has seen annual consumer prices fall each month since May to levels that are higher only than those in Croatia.
Romania is gradually lifting prices for natural gas as it pledged to align tariffs for domestic gas output with those in the EU by 2009. Natural gas prices rose by as much as 8.5% starting on November 11, while electricity prices also rose 4.7% as of December 11. The cost of food items rose the most, by 1.15% in December, following a 1.3% gain in November. The cost of services rose fell by 0.5% in the month.
Non-food prices rose 0.9% in December, driven mainly by electricity tariffs, which gained 4.6%, and by natural gas prices, which rose 2.7%. The inflation rate in December stood at its lowest year-end level since Romania broke with its former communist regime 17 years ago. The rate met the central bank's target of 5% plus or minus 1 percentage point for 2006.
Consumer prices rose a monthly 1.1% in November. The central bank at its latest board meeting on December 28 left its benchmark rate unchanged at 8.75%, the highest in the enlarged 27-member EU and almost twice as high as the November inflation rate, as it seeks to prevent a pickup in inflation stemming from the energy price increases. (Bloomberg)