UPDATE 1 - Romania's Consumer Prices Fall 0.19% M/M in August

Annual inflation slowed down to 4.96% in August from 5.06% in July.

Three local bank analysts polled by SeeNews earlier this week forecast a monthly inflation of around 0.0% and an annual inflation of between 5.1% and 5.3% in August.

The average monthly consumer price inflation in the first eight months of 2009 was 0.4%, compared to 0.5% a year earlier, Romania's statistics office INS said in a statement.

“August’s inflation came in lower than […] our projection of 5.3%. Our forecast error arises mainly from lower-than-expected food prices, which have been an important contributing factor to the disinflation process throughout this year. […] while the picture for the services component of the CPI seems somewhat less encouraging,” Citibank said in its report on Romania issued also on Thursday.

“Fiscal slippages, oil prices and adverse exchange rate shocks are the key risk factors that could lead to deviations from the envisaged disinflation path,” according to Citibank’s analyst Ilker Domac, who drafted the report.

Romania's end-year inflation slowed to 6.3% last year from 6.57% in 2007, way above the upper end of the central bank's 2.8%-4.8% target band for 2008.

Romania's August consumer prices (pct change):