Romania's Consumer Price Index inflation eased to 8.5% in February, year-on-year, down from 8.9% a month earlier on the back of the modest 0.24% increase in the consumer prices for the month. The performance was better than expected by both central bank and independent analysts. The local currency's 2.9% month on month nominal appreciation in February was the main driver behind the moderate increase in average consumer prices, while the impact of the 17% natural gas price hike in January was softer than expected. The prices linked to the euro, such as telecom tariffs, airplane tickets and car prices were the first to drop in February.
Headline inflation reacted rather modestly to the local currency's appreciation last year but it may be that importers and local providers charging prices linked to euro to saw the appreciateion as sustainable and therefore passed price increases to end consumers. Under current circumstances, the central bank may loosen its sterilisation policy. The central bank's monetary council is due to meet two weeks from now. Sterilisation operations are carried out at 8.5% inflation and the consensus was, until the February inflation release, that the central bank may increase the rate by one to two percentage points during this year such to support disinflation. But speculative inflows were seen as a potential threat even before the February numbers showed better than expected disinflation.
Ukraine's government will present its energy policy to 2030 next week, Prime MinisterYuri Yekhanurov said on Friday. The key point of the policy is increasing production of electricity by launching new nuclear power capacities. The Government hopes nuclear power will grow to two thirds of total electricity output. This week the Prime Minister visits Zhovti Vody, where a large share of uranium is produced, to discuss possibilities of boosting extraction of the raw material. Also, the Prime Minister confirmed the government's support for a $150 million project to build storage for spent nuclear fuel in the country. US Holtec International has won the tender for building the storage. The parliament should approve the project. Regarding new energy policy, Yekhanurov also said the country will increase domestic natural gas production to 30bn m 3 per year until 2090-2010
News from Euromoney Group sources