Romanian Consumer Prices Fall More Than Expected on Food Costs

Romanian consumer prices declined more than expected as higher natural gas tariffs failed to offset a sales-tax cut that had prompted the first negative inflation rate since communism collapsed.

Prices dropped 1.7 percent from a year earlier in July after June’s 1.6 percent fall, the National Statistics Institute said Tuesday in an e-mailed statement. That exceeds the 1.3 percent decrease seen in a Bloomberg survey of eight economists. Prices fell 0.2 percent from the previous month.

The European Union’s second-poorest member is enduring what the central bank calls a period of “temporary deflation” after the government cut the value-added tax for food and revealed plans to expand fiscal loosening next year. That prompted policy makers to trim their inflation forecast for this year to minus 0.3 percent and lower interest rates to a record.

“Inflation is projected to stay in negative territory for a long time,” Zoltan Arokszallasi, a Budapest-based economist at Erste Group Bank AG, said in an e-mailed note.

The leu was little changed at 4.4111 against the euro as of 9:35 a.m. in Bucharest. That brings this year’s gain to 1.5 percent, data compiled by Bloomberg show.

Food prices sank 7.3 percent from a year earlier, while non-food items advanced 1.3 percent and services costs rose 2.2 percent, the institute said.