Isarescu Says Romanian Food Prices Rise At 2nd Fastest Pace In Region

05.05.2011 By Florentina Dragu

Romanian food prices are growing at the second-fastest pace in the region, after Bulgaria, central bank governor Mugur Isarescu said Thursday, adding that the prices’ weight in the consumption basket remains an unresolved issue.

Speaking at the presentation of the quarterly inflation report, Isarescu said Romania reported the second-biggest increase of food prices among seven ex-communist states in the region.

Additionally, food prices weigh 33% in the national consumption basket, the highest level in the region.

"We've discussed the matter at length with the statistics institute (…). It is what it is; we have to work with this indicator," Isarescu said.

He reiterated that food prices were the main factor that contributed to the higher inflation.

"Domestic production is insufficient to cover the consumption and this is a major imbalance which creates problems in Romania," Isarescu added.

Romanian annual inflation accelerated to 8% in March, the highest rate since August 2008, mainly driven by higher prices for food and fuels.

The central bank targets an annual inflation of 3% at the end of 2011, plus/minus one percentage point around the band. On Thursday, the central bank announced it has raised its forecast for the December annual rate to 5.1% from 3.6% previously.