VAT Increase Pushes Romania Inflation Up To 7.14% In July

Romanian consumer prices spiked by nearly two and a half percentage points to 2.58% in July from a month earlier, while the annual inflation accelerated to 7.14%, the country’s statistics institute INS said Wednesday.

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In June, the country's monthly inflation came in at 0.16%, while the annual rate was 4.38%.

The sharp increase in July inflation was widely expected by analysts, who estimated a recent increase in the sales tax level would weight heavily on consumer prices.

Food prices rose 1.92% in July, after a 0.1% decrease a month earlier, while non-food and service tariffs were up 3.08% and 2.55% on the month respectively.

Romania's harmonized index of consumer prices, or HICP, stood at 4.8% end-July, from 4.6% the month before.

The International Monetary Fund recently revised its forecast on Romanian annual inflation to 7.9% in 2010 from 3.5% previously, following the enforcement in early July of a five-percentage-point increase in the sales tax rate to 24%.

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