UPDATE 1 - Romania's Nov inflation slows on low non-food prices

In annual terms inflation slowed down to 4.56% last month from 4.96% in October, Romania's statistics office INS said in a statement.

"Consumer prices were flat in November (+0.04% mom), while our expectations and market consensus were for an increase of 0.4% mom," Raiffeisen Research commented in a statement on Tuesday.

Non-food prices were 0.1% down month-on-month mostly on a 1.5% decrease in prices of fuels and a small increase of 0.02% in prices of medications and medical products.

Food prices rose by 0.29% on the month in November, mainly due to a 8.07% jump in the prices of eggs, a 0.64% increase in milk and dairy products and a 1.08% rise in cheese prices. Prices of citruses and other exotic fruit dropped by 6.49% on the month.

"Better than expected dynamics was mainly the result of leu appreciation which resulted in a fall of 0.8% mom in case of tariffs for phones, of decline in gasoline prices," Raiffeisen Research said, adding that some of the factors that pushed up the inflation rate in the summer were reverted in October and November.

Services prices went down by 0.14% from October mainly due to a 0.73% drop in telephone tariffs and a 0.56% decrease in prices of postal services and telecommunications.

"Annual inflation rate would probably be close to 4.7% yoy in December, while it would remain close to 5% yoy in H1 2013. This would be better than we [Raiffeisen Research], the market, and the central bank expected only one month ago (inflation close to 5.5% yoy)," Raiffeisen added and explained that "lower than expected inflation should mitigate the upward pressure on money market interest rates and yields for Treasury securities."

The average monthly inflation in January-November was 0.4% compared to 0.3% a year earlier.

Romania's November CPI (pct change):

Romania's end-2011 inflation slowed down to 3.14% from nearly 8.0% in 2010. The country's central bank forecasts 5.1% inflation at end-2012.