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Romanian official inflation stable

BUCHAREST, July 12 – Romanian inflation was stable in June before a five-percent rise in VAT sales tax on goods and services from July 1, official data showed on Monday.

The consumer price index rose by 0.16 percent in June, while food prices dropped by 0.06 percent.

But analysts say inflation is set to go up in July, after the government\’s decision to raise the VAT tax by five points, from 19 to 24 percent.

Bankers expect inflation to top 7.0 percent in July, Mediafax news agency said.

Central bank governor Mugur Isarescu said last week that inflation would accelerate this year to 8.0 percent, more than double the initial forecast of 3.5 percent.

Mired in recession for more than a year, Romania has adopted an austerity package including a 25-percent cut in pay for public sector workers.

This should enable it to curb its public deficit to 6.8 percent in 2010 and get new instalments of a 20-billion-euro loan from the International Monetary Fund and the European Union.

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