The annual inflation rate fell in July to 4.85 percent, compared to 7.93 percent in the previous month, due to cheaper prices in June, while consumer prices were reduced by 0.35 percent compared to June, for the second consecutive month, according to data published on Wednesday by the National Statistics Institute (INS).

Compared to December 2010, it was reduced to 2.39 percent.

In July this year, consumer prices fell by 0.35 percent compared to June, due to cheaper food, so that Romania has the second consecutive month of deflation in the past two years.

The first drop in consumer prices occurred in June 2011, when they fell by 0.3 percent from the previous month. Last price downward trend was recorded in August 2009, when the products went cheaper on average by about 0.2 percent.

In July this year, food prices fell by 1.9 percent, mainly due to cheaper fruit and vegetables, but also to lower prices for milk and dairy products, sugar and beer.

Instead, lower food was offset by higher prices for services by 0.9 percent, water, sewerage and sanitation, but also the telephone, while non-food prices rose by 0.4 percent in July.

Total average price increase on the past 12 months (August 2010 - July 2011) from the previous 12 months (August 2009 - July 2010), determined based on CPI and determined by the Harmonised Index of Consumer Prices (HICP), is 7.6 percent.

According to data provided Monday by the BNR Governor Mugur Isarescu, Romania's National Bank / BNR / revised downward inflation projection for 2011 from 5.1 percent to 4.6 percent. Also, BNR inflation projection for 2012 was revised downward from 3.6 percent to 3.5 percent.

The Central Bank predicts that inflation will fall to 5 percent or even below 5 percent in September and by this year-end a stagnation will be recorded. Inflation fell in June to 7.9 percent, from the last three years peak, of 8.4 percent reached in May.

Central bank's inflation target is 3 percent plus / minus one percentage point this year and in 2012, and for 2013 of 2.5 percent plus/minus one percentage point.