Annual inflation rate falls below 6% in May

Romania’s annual inflation rate fell in May for the fourth consecutive month, to 5.95%, amid a decline by 0.05% in food commodity prices. “The lower food prices and the weak aggregate demand are strong disinflationary forces that should outweigh the pass-through from the weak RON. Barring new exchange rate shocks and rapid rises in commodity prices, we expect disinflation in Romania to stay on track,” analysts of American bank Citi believe. In May non-food commodity prices saw a 0.03% rise against the previous month, while prices of services went up by 0.11%, according to data from the National Statistics Institute. Monthly inflation fell to 0.01% in May, the lowest level recorded this year. In the food commodities category, the biggest decline was recorded by egg prices, which fell by 3.92%. Significant cuts were also recorded by citrus fruits (-3,33%), fresh fruit (-2.31%), edible oil (-1.72%) and cheese (-1.36%). On the non-food commodities segment, the biggest drop was recorded by gas prices (-2.57%), followed by car and car parts prices, down by 0.26%. Fuel and cigarettes saw the biggest price rises, by 0.45% and 0.63% respectively. In the service category, postal fees went up 1.83%, while water, sewerage and sanitation costs went up by 1.71%. On the other hand, rents fell 0.22%, while phone services and air travel services became 0.6% cheaper. Citi expects year-end inflation to reach 5%, above the recent forecast of the NBR (National Bank of Romania) – which put it at 4.4%.