The annual Consumer Price Inflation dropped to 8.6% in December from November's 8.7% y/y, as the consumer price index increased by 0.5% during the month, according to the preliminary data released by NIS (National Institute for Statistics). It was the second consecutive year after the post-communist period, when Romania succeeded to limit its whole year inflation in the single digit area, as also in 2004 the annual CPI reached 9.3%. However the NBR missed its 7.5% target, even the upper fluctuation interval of 1pps.

The decrease of the annual inflation was determined mainly by the substantial drop in the CPI index in August, when the monthly inflation fell to 0.1%. During 2005, the average inflation stood at 0.7%, increasing by 0.1% since the third quarter of the year. Speaking of the three main categories of goods, December's monthly inflation was driven by the food sector, as prices soared by 1.1% due to the damages caused by the floods to the agricultural production. The prices of the non-edible goods advanced by 0.2% and those of services rose by 0.3%.

Melania Hancila
Research Analyst Treasury Division

Finansbank (Romania) S.A.
Phone: +40 21 301 73 42
Fax: +40 21 318 09 61