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Tuesday, June 3, 2008

Romania Producer Price Growth April 2008

Romanian producer-prices, which are normally regarded as an early predictor of inflation, rose at close to their fastest pace since 2004 in April as energy prices increased a weaker leu raised the cost of imported raw materials.

The cost of goods produced in factories and mines was up 15.5 percent in April over April 2007. This compares with a 15.6 percent rate in March, according to the latest data from the Bucharest-based National Statistics Institute. Prices rose 1.1 percent on the month, after rising 1.7 percent in March over February.

Romania already has the European Union's highest interest rates, at 9.75 percent, after a pick-up in inflation to the fastest pace in two years led policy makers to raise borrowing costs at every monetary policy meeting since October. The central bank expects inflation to exceed its target for a second consecutive year in 2008.

The leu has weakened almost 10 percent against the euro over the past year, the second-worst performance in Europe behind the Icelandic krona, making imports of capital goods and raw materials more expensive.

Prices of manufactured goods increased an annual 17.7 percent in April, while prices in the mining and drilling industries rose 13.2 percent. The costs of electricity, natural gas and water rose an average of 2.9 percent, the statistics institute said.

Consumer-price growth in April remained at a two-year high of 8.6 percent from an annual 8 percent in February.

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