Consumer prices in Romania remained steady in November compared to October and the inflation rate even edged down to 7.8% y/y from 7.9% y/y in October, the statistics office INS announced.
After the government enforced the ‘cap and subsidy’ mechanism for residential energy prices (electricity and natural gas), the price of electricity dropped by 12.2% m/m in November and this offset the moderate increase in the prices of fuels (+1.7% m/m), natural gas (+2.3% m/m), heating (+10% m/m) and of some food products (edible oil, sugar).
Notably, the natural gas price kept increasing in November (+2.3% m/m) despite the same subsidy mechanism being enforced as for electricity.
In annual terms, the main inflationary drivers are the price of fuels (+25% y/y) and energy (electricity, gas, heating +23% y/y).
The prices of some food items increased significantly as well: that of the edible oil rose by 28% y/y, while those of the sugar and maize were up by 10%-12% y/y.
Looking forward, the higher energy prices are expected to pass through to consumer goods prices resulting in persistent inflationary impetus. Romania’s industrial price inflation soared to 26.8% y/o in October, largely due to the high energy cost, putting pressure on the consumer price inflation that neared 8% y/y in the same month. The Romanian central bank expects inflation to peak at 8.6% next year.
The headline inflation is expected to hit 7.5% y/y at the end of this year then rise to 8.6% y/y at the end of the second quarter of next year as the temporary energy bill subsidies are phased out, and ease to 5.9% y/y at the end of 2022, under the revised inflation outlook revealed by the National Bank of Romania (BNR) on November 11.