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UPDATE 1 - Natgas, tobacco prices spur Romania's April inflation - analysts

UPDATE 1 - Natgas, tobacco prices spur Romania's April inflation - analysts Romania's annual inflation rate

BUCHAREST (Romania), May 14 (SeeNews) - Romania's annual consumer price inflation quickened to a five-year high of 5.2% in April mostly due to a rise in the administered price of natural gas and tobacco, analysts said on Monday.

"Rising Brent oil price on international markets added pressure on fuels price (+1.6% m/m). All these factors drove up the price of non-food items by a sizable 1% m/m in April. The price of food items was rather calm at 0.2% m/m, while services saw a minor increase of 0.1% m/m helped by the monthly appreciation of the leu.," Erste analysts said in an e-mailed short note on Romania.

On a monthly comparison basis, Romania's consumer price index (CPI) rose by 0.54% in April , as food prices climbed 0.18%, non-food prices added 1.0% and prices of services edged up 0.09%, the national statistical office, INS, said earlier on Monday.

Looking ahead, inflation might decline slightly in May and it will remain close to 5% until the beginning of the autumn, the analysts predicted.

Erste's year-end inflation forecast is 3.7% y/y with an important drop in October largely explained by a statistical effect, as monthly inflation was very high in October last year.

"Risks to our inflation scenario are tilted to the upside, as global oil price has embarked on a steady upward trend reflecting higher political risks in the Middle East. Agricultural harvest still dependent on weather conditions and future trajectory of administered prices also pose risks to our inflation forecast," Erste analysts concluded.

For their part, ING analysts too said that Romania's high April inflation was driven by the liberalisation of natural gas prices for households and the increase in excise duty for tobacco.

"Headline inflation is expected to converge back towards core inflation once base effects roll off in the last quarter of 2018," ING analysts added.

Romania's annual consumer price inflation quickened to 5.2% in April from 5.0% in March, reaching a five-year high, INS said. Food prices rose 4% year-on-year in April, while non-food prices were up 7.2%. Prices of services increased by 2.83% year-on-year in April .

On May 9, Romania's central bank said it has lifted its annual inflation forecast for this year to 3.6% from 3.5%, outside of its target band of 1.5-3.5%.

On May 7, BNR increased its monetary policy rate to 2.50% from 2.25% - the third rate hike this year, as inflation accelerated.

(1 euro=4.6348 lei)

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