Industrial prices up by 10.4% YoY in May

The industrial price index, also known as the factory-gate price index, increased by 10.4% YoY as of May, Romania’s statistics office (INS) announced.

This is more than twice the 3.7% YoY consumer price index in the same month. Industrial prices leapt up by just over 2% in the month and kept recovering in line with the reopening of the global economy.

They plunged by 4.1% in Jan-May 2020, amid lockdown, but they already fully recovered meanwhile and are now rising faster than the consumer prices - supposedly generating inflationary pressures.

The energy prices increased by 25.8% YoY as the prices at refineries’ gates soared by 96.3% YoY.

Separately, the prices of the metallurgical plants surged by 33.2% YoY. Double-digit growth rates are seen in wood processing (furniture excluded) and pharmaceuticals manufacturing.

But the magnitude of the inflationary pressures is not proportional to the rise in the factory-gate prices because of the recovery effect: in many industries (oil processing particularly), the prices have actually returned to the pre-crisis levels.

And speaking about pre-crisis, it is relevant to say that the energy prices were rising fast. Thus, the energy prices edged up by only 1.4% as of May 2021, compared to January 2020, at a slower rate compared to the consumer prices.

However, over the previous two years, the energy prices had soared by 18% - 2.5 times and a significant 11pp faster than the consumer prices (+7%). In contrast, the process of the metallurgical products soared by 32% since January 2020 after a small 0.9% decline over the previous two years.

Looking forward, the Resilience Plans across Europe and particularly in the central and eastern part of the continent 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.

(Photo: Nuthawut Somsuk/ Dreamstime)