Record-high inflation in Romania 12/05/2022
Due to the war in Ukraine and the energy crisis, more and more countries report record-high inflation rates, including Romania
Daniela Budu, 12.05.2022, 13:50
After countries all over the world reported record-high inflation rates last week, Romania too is confronted with the highest annual inflation rate in the last 18 years – nearly 14%, way above the Central Banks estimates. Natural gas reported the highest increase in April, by over 85%, potatoes and cooking oil by nearly 40%, and fuel by over 35%. 20% price hikes were also reported for heat, electricity, air transport, postal services, water, sewerage and sanitation utilities. Prices for fresh and canned vegetables also went up, as well as for grains and flour products, including bread, thus reducing Romanians purchase power considerably. According to the National Statistics Institute, most general consumption products did not report any decrease. Only the prices for rail transport and telephone services leveled out.
The Central Bank estimates the inflation will continue to exceed the original forecast and is expected stay above 10% in the first half of next year as well and go below this mark only in the second half of 2023. To help the economy, the Bank has increased the monetary policy interest rate, which is a reference for setting loan rates. According to the National Bank, the energy price hikes cannot be kept in check by the reference rate, although it can influence the general evolution of prices. Against the backdrop of price hikes across the board, the business sector believes inflation is the main threat right now. The factors that impact the current evolution are expected to continue, experts say, estimating the inflation will continue to rise until summer. Specialists also argue the more tangible effects of price hikes on Romanian consumers will appear in the second half of the year, because consumption prices will continue to go up, also under the influence of the negative fallout of the war in Ukraine and the related sanctions.
In this context, the government is looking for solutions to ease the pressure on the population, and has already adopted two measures as part of a support package. The first is a 50-Euro social voucher that will be provided every two months to individuals with low income, while the second measure will adjust material prices for ongoing construction projects using European funds. Besides, the government is also discussing an emergency decree that will allow the Competition Council and the Consumer Protection Agency to intervene more quickly when operators increase prices without due justification, which the authorities have noticed on numerous occasions of late. (VP)
