Industrial prices in Romania rose in May by more than 10% y/y, accelerating from the negative growth rates seen during the lockdown period.
The industrial price index, also known as the factory gate price index, increased by 10.4% y/y as of May, Romania’s statistics office (INS) announced. This is more than twice the 3.7% y/y consumer price index in the same month.
Industrial prices leapt by just over 2% m/m in May and kept recovering in line with the reopening of the global economy.
They plunged by 4.1% in January-May 2020, amid the lockdown, but have already fully recovered meanwhile and are now rising faster than consumer prices, generating inflationary pressures.
Energy prices increased by 25.8% y/y as the prices at refineries’ gates soared by 96.3% y/y. Separately, the prices of metallurgical plants surged by 33.2% y/y. Double-digit growth rates are also seen in wood processing (furniture excluded) and pharmaceuticals manufacturing.
But the magnitude of the inflationary pressures is not proportional to the rise in factory gate prices because of the recovery effect: In many industries (oil processing particularly), prices have actually returned to pre-crisis levels.
Energy prices were rising fast at the time the health crisis forced governments to announce lockdowns. Thus, energy prices edged up by only 1.4% as of May 2021, compared to January 2020 (before crisis), at a slower rate compared to consumer prices.
However, over the previous two years, energy prices have soared by 18% - 2.5 times and a significant 11pp faster than consumer prices (+7%).
In contrast, the prices of metallurgical products have soared by 32% since January 2020 after a small 0.9% decline over the previous two years.
Looking forward, the EU's Recovery and Resilience Plans will push up demand, hence prices, in specific industries related to the massive investment projects.
The decarbonisation efforts will add more pressure on energy prices.