Inflation rate on a downward trend

This is a traditional pattern usually seen on the consumer market during the summer, but the magnitude of the price decrease was a surprise. Non-food products advanced by 0.2% m/m due to higher fuel price (+0.7% m/m). The monthly depreciation of RON translated into higher tariffs for services (+0.7% m/m).

Today's inflation data shows that the NBR should not hurry to tighten monetary policy in 2011, especially if we think that inflation will continue to decline in 2H11 due to a strong base effect and household consumption is still weak. We foresee the first 25bp hike in the key rate in 1Q12.