Consumer prices in Romania have absorbed only half of the energy price shock so far

The industrial prices for intermediary industrial good s, which do not include the energy prices, rose by 50% over the past couple of years as of October (when they were up 20.5% YoY) - twice as fast as the consumer goods, which have advanced by only 23% (as of September, latest data available) over the same period of time.

The 250% surge in the price of energy accumulated over the past two years has not yet passed through to the factory-gate prices of the end-user goods, which increased by between 19% (for capital goods) to 27%-28% for the consumer goods (durable or non-durable).

While the sharp rise in energy prices is not likely to fully reflect in end-user prices, the price of intermediary goods is a good proxi for where the consumer prices should be within several quarters.

The distribution and retail chain seems to have absorbed a certain (small) part of the rise in consumer goods in order to avoid a significant drop in sales.

But the VAT collection data for October (only 3% up YoY) indicate subdued consumption, Ziarul Financiar warned, quoting economic analyst Aurel Dochia. Unless the energy prices diminish in the coming period, the potential for a further rise in consumer prices is significant, and consumer price inflation may easily remain in the double-digit area over the next 12 months.

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