BUCHAREST, Jan 11 (Reuters) - Romania's annual inflation quickened to an annual 5.0 percent in December from

November's 4.6 percent, slightly below the central bank's

forecast but above market expectations.

The central bank halted a rate cutting cycle in May 2012 due

to persistently high inflation and a weak currency, even as the

economy struggles to recover from a deep recession, and it has

not followed neighbours Poland, the Czech Republic and Hungary

in easing borrowing costs recently.

Consumer prices rose 0.6 percent on the month, the National

Statistics Board said. Food and non-food prices were up 0.7

percent and 0.9 percent, respectively, while services fell 0.2

percent from November.

The central bank forecasted inflation at 5.1 percent in

December, above its 2-4 percent target, mostly due to food

prices. A Reuters poll of 14 analysts expected inflation at 4.6

percent year-on-year in December.

MARKET REACTION

The Romanian leu was a touch lower after the data

release, trading down 0.1 percent on the day at 4.373 per euro

by 0806 GMT.

MARKET FORECAST

A median forecast of 14 analysts polled by Reuters showed

Romanian inflation at 4.6 percent year-on-year in December, flat

from November. The monthly forecast is 0.3 percent.

KEY FIGURES

CPI (pct change) DECEMBER 2012 NOVEMBER 2012

yr/yr 5.0 4.6

mth/mth 0.6 0.0

ANALYST COMMENTS:

VLAD MUSCALU, ING

'It's not too far from our above-market call of 4.8. It's

not as bad as the headline suggests since CORE3 inflation is

actually flat at 3.3 percent. The acceleration was driven by

volatile food prices and this persisting upside trend will

probably feed into processed food prices, so more acceleration

remains likely for 1H13.'

'For markets the print is less relevant as the inflows are

probably steered by the growing demand for domestic debt. No

real chance for (interest rate) cuts but we were not really

looking for cuts anyway. So it's not this print that makes me

say that there are no real chances.'

BACKGROUND LINKS:

- For LIVE Romanian economic data releases, click on

- Overview of Romanian macroeconomic indicators

- Key data releases in central Europe

- For Romanian speed debt speed guide

- For Romanian money markets data click on

- Key data releases in central Europe

- For Romanian speed debt speed guide

- For Romanian money markets data click on

(Reporting by Ioana Patran and Sam Cage)

Keywords: ROMANIA ECONOMY/INFLATION

(ioana.patran@thomsonreuters.com)(+40 21 305 52 65)(Reuters Messaging: ioana.patran.thomsonreuters.com@reuters.net)

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