Inflation slightly up in Romania to 4.67% y/y in October
<p>Romania's headline inflation edged up slightly to 4.67% y/y in October from 4.62% y/y in September, as the prices increased by 0.67% m/m, according to data published by the statistics office INS.</p>

<p>The small advance came amid analysts' expectations for a marginal slowdown witnessed by a Bloomberg survey median of 4.6% y/y. Most of the forecast error from our side came from volatile food items, Erste Research (which expected 4.4% y/y inflation in October) explained in a research note.&nbsp;</p>

<p>Further acceleration to 4.9% y/y is anticipated by the central bank (BNR) by the end of the year, and after that, it all depends on the government's fiscal and budgetary corrective package.&nbsp;</p>

<p>Under the baseline scenario, Romania's inflation would drop to 3.5% y/y by the end of 2025, but BNR sees multiple sources of uncertainty and consequently kept this month the monetary policy rate at 6.5%, which is in line with a moderately restrictive posture. Further rate cuts depend on the fiscal and budgetary package's calendar and structure.</p>

<p>The CORE2 inflation edged down marginally to 5.6% y/y in October – while still remaining above the headline inflation that is constrained by the controlled prices.</p>

<p>Thus, the average price of the energy basket, including natural gas, electricity, and heating, decreased by 6.5% y/y as of October. Some food prices are also controlled – but the food prices as a whole increased slightly faster than the headline inflation, by 4.75% y/y.&nbsp;</p>

<p>The prices of services marked the fastest annual advance, +7.66% y/y in October, witnessing a robust rise in households' incomes. The prices of non-food goods were dragged down by the energy prices and rose by only 3.45% y/y as of October.</p>

<p><em>iulian@romania-insider.com</em></p>

<p><em>(Photo source: <a href="https://www.dreamstime.com" rel="noopener" target="_blank">Tero Vesalainen/Dreamstime.com</a>)</em></p>