Inflation drops to a 4% low in January

The increase in consumer prices stood at 0.2% in January, and the annual inflation at a mere 4%. The annualised inflation figure (for the last 12 months) dropped almost 0.9 percentage points in just one month, from 4.87% in December to 4.01% in January. Inflation dropped below expected levels in the first month of the year, managing to exceed the support threshold, of 4.2%, that the National Bank saw as impossible to exceed in 2007. According to the NBR’s disinflation scenario, the increase in consumer prices was expected to oscillate between 4.2% and 4.8% this year, excluding the 4% inflation seen after the first month, which was not included in this calculation. For this year, the National Bank set an inflation target of 4%, plus or minus one percentage point. In 2006, the central bank managed to hit its inflation target of 5%, plus or minus one percentage point. In January, the inflation below the expectations of the market was made possible by the drop in prices of non-food products by 0.2% and to the increase of only 0.28% in the prices of food products. In addition, utilities, which had put pressure on inflation rates over the last 2 years, did not witness any price rise in January.