Romania’s industrial production prices accelerate

Romania’s industrial production prices accelerate

By bne IntelliNews July 4, 2018

The industrial production price index in Romania increased by 5.2% y/y in May, accelerating from 4.2% y/y in April, to hit the highest annual growth rate since early 2013, the statistics office informed.

The rising energy prices and the cost of labour are the main two drivers behind the industrial price inflation, and they will likely remain significant in the coming quarters. The local currency’s weakening will add as a significant driver when the weakening risks driven by fundamentals materialise.

While Romania’s industry is particularly energy-intensive (compared to the average in the European Union), the wages still have to catch up for years before converging to the EU averages. Energy prices have increased by nearly 20% since they bottomed out in February 2016 and wages increased by more than 20% (in real terms) during 2016 and 2017.

In May, energy supply prices surged by 12.1% y/y (+3.6% m/m), accelerating from 5.4% y/y in April. This is likely to surface in higher prices of intermediary and final goods during the coming months. The average production prices of the consumer goods increased by only 1.8% y/y in May, while those of the durable goods rose by 2.7% y/y. But the prices of the intermediary goods already reflected the higher energy prices and the local currency’s moderate weakening: they increased by 5.2% y/y in May.

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