Inflation dropping in Romania
The year-on-year inflation rate dropped from 8.8% in September to 8.1% in October
Corina Cristea, 14.11.2023, 14:00
After
last April the annual inflation rate exceeded the 10% ceiling for the first
time in nearly 20 years, the end of last year saw this indicator rising to a
peak 16.32%. The annual inflation rate then started to drop from one month to
another, going back to under 10% this July. Now, the National Statistics
Institute announced in October it had reached 8.1%, that is, half the level
reported in December 2022.
Prices however have risen
considerably since last year, most significantly for services (over 12%), foodstuffs
(8.8%) and non-foods (less than 7%). The most substantial rise was reported for
airline fares, which are over 25% higher than in October 2022, while the prices
of healthcare services and accommodation also went up more than 16%.
For foodstuffs, the steepest
price rises were seen for beer (over 17%), and for fish and fish products
(around 16%). Pork and beef, canned meat and fruit, margarine and potatoes also
saw prices going up more than 10%.
Of the non-foods, detergent
prices went up the most substantially, by nearly 24%, followed by heating
prices (over 22%) and hygiene, cosmetics, medicines and medical products, with
rises of over 15%. On the other hand, electricity prices have dropped by 15%, while
natural gas prices remained constant.
The downward trend for
inflation will stay on in the months to come, the National Bank of Romania said
last week, but prices are expected to rise again early next year. According to
the central bank, there are significant uncertainties and risks related to
inflation, on the one hand due to the rise in taxes and charges aimed at
strengthening the state budget, and on the other hand because of the oil price
developments in the context of the conflict in the Middle East. Moreover, the
year 2024 will also be an election year, with 4 rounds of elections in Romania.
The National Bank’s inflation
forecast for this year stays at 7.5%, but the central
bank has operated an upward adjustment on its 2024 forecast, to 4.8%. According
to the new estimates, the inflation rate will get back into the range targeted
by the central bank, namely between 1.5% and 3.5%, only in the 3rd
quarter of 2025.
Romania currently has the
second-highest inflation rate in the EU, double the ones reported in Western
European countries, and analysts blame this on the very high production costs-from
electricity to natural gas to logistics and transportation, everything costs
more than in the countries in the region. And this ripples down to the prices
of food, of services, of everything that the economy uses. (AMP)
