Romania’s consumer price inflation (chart) accelerated to 5.4% y/y in July from 4.9% y/y in June, the statistics office announced.

The main causes were base effects in the food segment — prices were dropping fast in June-August 2023 amid new regulations enforced by the government — and visible recovery in the energy prices during June and July. 

These two drivers may remain relevant in August, but the central bank has assured citizens that the disinflation will resume. Independent analysts are more cautious, though. Rising incomes (wages, pensions) on the demand side and the energy prices on the supply side are the main upward risks.

The National Bank of Romania (BNR) recently revised downward the yearend projection for headline inflation to 4.0% y/y in 2024 and 3.4% y/y in 2025. The latest CFA macroeconomic survey carried out at the end of June, however, indicates average expectations for annual inflation of 4.76% y/y in June 2025, compared to 3.7% y/y in the latest inflation forecast (August) issued by BNR.

In July 2024, food prices increased by 1.7% y/y, accelerating on base effects from 1.1% y/y in June despite the moderate 0.1% m/m advance.

Growth in non-food prices also gained momentum to 6.9% y/y in July from 6.3% y/y in June, driven by higher fuel (2.9% m/m) and energy (1.0% m/m) prices. 

The prices of services, particularly elastic to households’ (growing) incomes advanced by 8.5% y/y in July, a visible improvement from the 8.8% y/y growth in June but still faster than the prices of non-food or food goods. The tariffs for public utilities (sewage, water, sanitation) rose by 15% y/y, air tickets were 16% y/y more expensive and the price of medical care services rose by 11% y/y.