September 9 (SeeNews) - Romania’s monthly consumer prices are expected to have remained unchanged in August after falling slightly in the previous month, on stable domestic currency and shrinking demand, analysts said.
Three local bank analysts polled by SeeNews earlier this week forecast a monthly inflation of around 0.0% for August, compared to a 0.07% deflation in the previous month. Annual inflation is seen at between 5.1% and 5.3%, versus 5.06% in July.
Romania's statistics board, INS, is expected to release August consumer price index (CPI) data on Thursday.
"Shrinking demand for many food and non-food products could temper to a certain extent the inflationary pressures, even though so far the inflation rate in Romania has reacted much weaker to the contraction of aggregate demand, compared to other European countries that experience deflation,” Lucian Anghel, chief economist with Banca Comerciala Romana, told SeeNews.
“The exchange rate [of the Romanian currency], a traditional determinant of inflation through telephone tariffs and imported goods prices, was almost unchanged in August and thus had a neutral influence on inflation,” Anghel added.
The Romanian currency, the leu, stabilised at 4.2185 per euro last month, compared to 4.2168 per euro in July, measured by the central bank's average monthly exchange rate.
Romania's end-2008 consumer price inflation slowed to 6.3%, way above the upper limit of the central bank's 2.8%-4.8% target band for the year. End-2007 inflation was 6.6%.
Last month Romania's central bank, BNR, cut its 2009 inflation forecast to 4.3% from 4.4%, within its target band for the year, and lowered its 2010 CPI projection to 2.6% from 2.8%. At the same time BNR affirmed its end-year inflation target for both 2009 and 2010 at 3.5%, with one percentage point variation band on either side, in accordance with Romania’s funding arrangement with the International Monetary Fund (IMF).
Crisis-hit Romania struck a 20 billion euro ($29 billion) loan deal with the IMF, the European Union and the World Bank in late March. The two-year package focuses on Romania's external and fiscal imbalances and on supporting its financial sector.
The three analysts polled by SeeNews made the following projections for Romania's inflation rate:
|
August, m/m |
August, y/y |
End-2009 |
Lucian Anghel (Banca Comericala Romana) |
-0.1% - +0.1% |
5.1%-5.3% |
within BNR's target |
Ionut Dumitru (Raiffeisen Bank) |
0.0% |
5.1% |
4.5% |
Georgiana Constantinescu (Credit Europe Bank) |
0.05% |
5.2% |
4.5% |
($ = 0.6895 euro)