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05. 02. 10. - 16:00

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05. 02. 10. - 16:00

Higher inflation forecast due to increases in tobacco and fuel excise taxes

Mediafax

Romania's central bank had raised its forecast of 2010 inflation to 3.5 per cent from the previous 2.6 per cent, central bank Governor Mugur Isarescu said today (Fri).

The central bank predicted the inflation rate would fall to 2.7 per cent in 2011.

Isarescu explained the increased forecast by citing higher than expected price increases in January following the increase of the tobacco excise tax.

The January increase in inflation would turn out to have been the highest monthly increase in 2010, central bank Deputy Governor Cristian Popa said today.

In 2009, Romania's central bank missed its inflation target for the third consecutive year, mainly due to increases in excise duties on tobacco and fuel.

The annual inflation rate stood at 4.74 per cent in December 2009, 24 basis points above the upper limit of the variation band around the target of 3.5 per cent.

In 2010, the central bank also targeted inflation of 3.5 per cent, with a one percentage point variation band around the target.

Isarescu also said that inflation might fall below the target, and even below the lower limit of the variation interval, in the final months of the year.

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