The spectacular appreciation of the domestic currency in November triggered price cuts, with the inflation rate falling below the expectations of analysts to 0.6%, half the 1.2% peak posted in October.
How did this inflation correction occur? According to the figures released by the National Statistics Institute (INS), it was the services sector that came to the rescue, a sector that saw a 0.7% average drop in tariffs, mainly due to the 3.9% decrease in telephony prices. Since RomTelecom uses the euro to calculate its invoices, while Orange and MobiFon (mobile telephone operators) use the US dollar, the clear consolidation of the domestic currency prompted lower tariffs in ROL.
Moreover, ROL prices levied by airlines dropped by an average of 3.1% since these companies also use foreign currency to calculate the cost of their flights. Thus, both the National Bank and the market are enjoying the first consequences of the change in monetary policy. The low inflation rate seen in November even exceeded the expectations of central bank Governor Mugur Isarescu. Before the INS results were released, the NBR Governor said the central bank had forecast a 0.7%-0.8% increase in consumer prices in November.
With November's 0.6% inflation rate, the central bank is certain to attain its yearly inflation target of 9% since, even if inflation surges to 1% in December, yearly inflation will not exceed 9.6%.
razvan.voican@zf.ro
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