Romanian Inflation Rate Drops to New Low on Falling Food Prices

Romania’s inflation rate fell to a record low in March as falling food prices offset service-price growth.

The annual rate dropped to 2.4 percent, the lowest in two decades, from 2.6 percent in February, the National Statistics Institute in Bucharest said today by e-mail. The rate matched the median estimate of 2.4 percent of 12 economists surveyed by Bloomberg. Consumer prices grew 0.4 percent in the month.

As inflation slowed to a post-communist low in the eastern European country, policy makers had room to cut the benchmark interest rate four times in a row since November to a record-low 5.25 percent to boost a halting recovery as the economy swings back to a recession during the European sovereign-debt crisis.

Food prices dropped 0.9 percent from a year earlier in March, compared with a 0.4 percent decline in February, the institute said. The prices grew 0.6 percent from a month, mostly because of rising vegetable, fruit and egg prices, as a cold snap disrupted supply chains across the country.

Price growth for non-food items slowed to 3.9 percent from a year earlier, compared with 4.1 percent in February, the institute said. Service-price growth quickened to 5.4 percent from 4.8 percent the previous month, according to the institute.

Romanian industrial output fell a seasonally adjusted 0.6 percent in February, posting a drop for the first time in more than two years, as freezing temperatures and heavy snow cut electricity and disrupted transport, hampering supplies, the Statistics Institute said today in a separate release. Output fell 1.4 percent on the month.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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