FLASH LETTER TREASURY DIVISION June 12, 2006

In May, consumer price index rose by 0.6% m/m, mainly because of excise hikes, however the data were slighly better than the consensus estimate of 0.8%. The headline inflation soared to 7.26%, advancing from 6.92% in April. Cumulated inflation reached 2.52% in the first five months of 2006, with a monthly average increase of 0.5%, slowing down from 0.8% posted in the same timeframe in 2005. Non-edible goods prices soared by 1.2% m/m, moving much faster as compared to the 0.38% increase in April, because of the vice tax, as tobacco weights 4% in the consumer basket. Electricity, gas and heating remained still during May, while fuel price grew by 1.3% during the month due to the evolution of the international prices. Considering the three main categories of goods, food prices had the best evolution during the month, advancing by 0.08% m/m, after the 0.45% rise in April. Services' prices rose by 0.3%, with telephony tariffs tempering the rises recorded in utilities and medical care services.

Melania Hancila Research Analyst
Treasury Division
Finansbank (Romania) S.A.
Phone: 40 21 308 52 66
Fax: 40 21 318 87 74