Romanian Inflation Quickens More Than Predicted Before VAT Cut

Romanian inflation accelerated more than estimated in May as food costs increased before a cut in the value-added tax the following month.

Consumer prices rose 1.2 percent from a year earlier after growing 0.7 percent in April, the National Statistics Institute said Thursday in an e-mailed statement from Bucharest. That exceeds the 0.8 percent median estimate of 11 economists surveyed by Bloomberg. Inflation was 0.5 percent from the previous month.

Anticipating a decline in consumer prices before VAT on food products was lowered to 9 percent from 24 percent, the central bank unexpectedly lowered its key rate to 1.75 percent on May 6 and warned of temporary deflation during the summer. It targets inflation of 2.5 percent plus or minus 1 percentage point and forecasts a year-end figure of 0.2 percent.

The leu, which weakened 0.6 percent against the euro last month, was little changed at 4.4668 at 9:10 a.m. in Bucharest, data compiled by Bloomberg showed.

Food prices increased 1.2 percent from the previous year in May, the institute said. Services costs advanced 2.1 percent, while non-food prices rose 0.8 percent.

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