Romania: Inflation increases in July
Inflation rose to 5.4% in July, up from June’s 4.9%, marking the first uptick since January 2023 and overshooting market expectations. The increase was broad-based, with both food and non-food prices rising at a sharper pace.
However, the trend pointed down, with annual average inflation falling to 6.9% in July (June: 7.2%).
Lastly, consumer prices rose 0.60% over the previous month in July, accelerating from the 0.24% increase recorded in June. July’s figure was the highest reading since February.
Regarding the inflation outlook, ING’s Stefan Posea stated:
“We expect the August print to show some mild improvements before we see more solid advances towards our 4.2% year-end forecast in September-October. From here onwards, our view is that the stimulative nature of wage growth, strong credit activity and loose fiscal policy is set to make the battle against still-sticky inflation quite challenging. Indeed, some downside pressures from the weaker state of the export-driven manufacturing growth will matter, too.”
Regarding risks, Dorina Ilasco, analyst at Erste Bank, added:
“We see risks to the inflation outlook coming from both directions. Energy prices remained volatile in recent months following legislative changes implemented as of April and might remain so in the near future adding a high degree of uncertainty. Brent oil prices curve has shifted downwards in July vs June but given the still ongoing conflicts in Ukraine and Middle East an upward shift later this year is not out of the equation. Political factors should also play an important role for inflation trajectory in 2025 as the government needs to bring additional revenues to address the large fiscal deficit.”