Romania's industrial price inflation surged to 4.0% year-on-year in February, reversing from a decline of 0.3% in January, according to data released by the National Institute of Statistics. The sharp rise was driven primarily by a 3.6% month-on-month increase in factory-gate prices, led by substantial gains in the energy sector (chart).

The February data highlights the growing influence of energy pricing on Romania's industrial inflation dynamics and signals potential volatility ahead as regulatory protections begin to unwind.

The energy sector recorded a 9.9% m/m increase in February, contributing to a 5.0% annual rise in energy input costs. This pronounced price movement underpinned the broader acceleration in industrial inflation. A similar dynamic was observed in consumer markets, with natural gas prices climbing 9.0% on the month due to increased reliance on imported gas at higher costs.

The government’s current energy price regulation regime for residential and industrial users is set to expire in mid-2025, a development expected to influence both consumer and industrial inflation trajectories in the medium term.

Intermediate goods saw more modest price changes, with a 0.4% monthly increase and a 2.0% annual growth rate, slightly up from 1.8% in January.

Final goods displayed varied trends, with prices for non-durable consumer goods maintaining a high annual growth rate of 5.4%, consistent with January’s 5.3%. Durable consumer goods, however, continued their slower advance, recording a 2.7% y/y increase.

Capital goods experienced heightened pressure from the energy sector’s volatility, posting a 4.1% y/y price increase in February, up from 3.6% in the previous month.