Romanian central bank raises 2008 inflation forecast

BUCHAREST (Thomson Financial) - The National Bank of Romania raised its inflation forecast for the current year on Thursday but predicted that price pressure would begin to ease from the summer after peaking in March.The central bank said it expected consumer price inflation to average 6.0 percent for the whole of 2008, fractionally higher than the previous forecast of 5.9 percent. The bank's governor Mugur Isarescu said inflation should start to slow in the summer after peaking at 8.63 percent in March, the highest level since January 2006.Nevertheless, there were still upside risks, Isarescu cautioned, pointing to wage hikes over and above increases in productivity; a steeper-than-expected decline in the value of the national currency, the leu; lax fiscal policy and fast-rising fuel prices.The only factor having a beneficial effect on inflation was the strong performance of the agricultural sector, following the catastrophic drought last year, the central bank chief said.The National Bank of Romania also downgraded its inflation forecast for 2009 to 3.5 percent from 3.9 percent previously.