Inflation up less than expected in May

The implementation of the vice tax has caused a rise in excise duties as of May, making cigarettes 9% more expensive, while the price of spirits went up only 0.5%, even though the business owners in that field had announced increases by as much as 30%. Monthly inflation stood at 0.6% in May, and the annualised inflation (May 2006 to May 2005) thus reached 7.26%, slightly up from the all time low of 6.92% in April. The 0.6% inflation rate is the highest price rise in May since 2002. Last month, the highest increase in price was registered for non-foods (1.2%), followed by services (0.3%) and foods, where prices almost stagnated (0.08%). The increase in non-food prices was mainly caused by the 9% increase in the cigarette price, caused by the introduction of the vice tax as of May 1. Prior to the rise in the excise duties, cigarette producers announced a pack of cigarettes would be 10-12% more expensive on average, an approximate increase of 5,000 ROL. The surprise came from spirits, where the business owners in this industry, announced price increases of 30% on the average a month ago, only to see products become 0.5% more expensive in May. “The estimated 30% rise in prices will occur in June, because deliveries in May were still done at the old price that was valid before the introduction of the vice tax,” Radu Morariu, vice-chairman of the Association of Alcohol and Spirits Producers (Garant), the association of business owners in this field, told ZIARUL FINANCIAR. ZF