Romanian Inflation Edges Higher Amid Political Risks
(Bloomberg) -- Romanian inflation unexpectedly edged higher last month, likely reinforcing a central bank wait-and-see approach to monetary easing due to price pressures and political risks before presidential elections in May.
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Consumer prices rose at an annual rate of 5.02% in February, compared with 4.95% in January, the statistics office in Bucharest said on Thursday. That's above the 4.7% median estimate in a Bloomberg survey of economists. Prices rose 0.9% from the previous month.
'Inflation, though easing from its peak, remains sticky, complicating the central bank's efforts to balance economic support with price stability,' said Ciprian Dascalu, a Bucharest-based economist at Erste Group Bank AG. 'Uncertainty remains elevated, stemming from both internal and external factors, including political developments, fiscal policy choices, and global economic conditions.'
Romania has been struggling over the past four months to exit a political crisis triggered by the unprecedented canceling of December's presidential elections after the first-round victory of a fringe pro-Russian candidate whose campaign raised suspicions of foreign meddling. The candidate, Calin Georgescu, was officially barred this week from running in the May 4 re-run in a move that may help ease the turmoil.
The central bank expects price growth to ease this year to 3.8%, which would still exceed the top end its target range. Policymakers have held the benchmark interest rate at 6.5%, tied with Hungary's for the highest in the European Union, to help tame inflation.
The budget deficit is forecast to reach 7% of the Black Sea country's economic output this year. While fiscal changes aimed at narrowing the gap are expected after the presidential elections, they may spark a short-term increase in the inflation rate and outlook remains clouded.
--With assistance from Harumi Ichikura and Joel Rinneby.
(Corrects the headline to reflect the scale of change.)
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