In November, CPI rose by 1.09%, exceeding consensus estimates of 0.8%, as seasonal factors and preparations to comply with EU standards exerted additional pressure to consumer prices. However, Romania's headline inflation continued to decelerate in November as well, due to the favourable base effect, down to 4.67% y/y from 4.8% y/y in previous month. In November, CORE2 inflation, NBR's favourite measure, decelerated its rhythm to 0.36% m/m from 0.53% in October, as a result of NBR's prudent monetary policy. The acceleration of disinflation process in 2006, mainly based on favorable conjuncture and postponed administrated hikes, indicated months before that NBR is to reach its inflation target of 5%.
The edible goods prices posted the highest increase this year, growing by 1.29% m/m, as the hike in gas prices fully showed its effects on bakery products, with the largest weight in the food basket, and also due to seasonal factors. The surprising rise in food goods prices came after four consecutive months of decreases during June-September, while in October they grew by 0.05%. In 2006, the edible goods were the main contributor to the disinflation process, especially in Q3, due to a better performance of agriculture as compared to last year.
The prices of non-edible goods advanced by 1.23% m/m, as they were also seriously affected by the administrative hike in November. In the non-food basket, nearly all categories recorded price growths, with gas (up by 5.7% m/m) and thermal energy (up by 17.5% m/m) leading the classification.
Unlike previous months, the service sector posted the lowest advance in prices, with train tariffs as main contributors, while telephony tariffs continued to drop, due to the sharp appreciation of RON against the hard currencies.