Inflation in Romania jumps to 5.42% in July

The annual inflation rate in July increased to 5.42% from 4.94% in June, according to data published by the National Institute of Statistics on Monday, August 12. Food prices rose by 1.71%, non-food items by 6.92%, and services by 8.52%.

The average change in consumer prices over the last 12 months (August 2023 – July 2024) compared to the previous 12 months (August 2022 – July 2023) was 6.8%.

The biggest price increases over the past year were in postal services (26.59%), medicine (24%), detergents (20.65%), medical supplies (19.75%), similar increases for hygiene, cosmetics, and medical products (16%), and airline tickets (15.65%), among others. Rents also increased by an average of 10.36%.

By comparison, price decreases were noted for flour (30.5%), milling products (28.55%), cornmeal (26%), edible oil (26%), but also butter, sugar, natural gas (9.4%), electricity, gas, and central heating (5.2%), and eggs (4.8%).

The National Bank of Romania revised its year-end inflation forecast downward last week to 4.0% from 4.9% previously, anticipating it will reach 3.4% by the end of 2025. However, BNR governor Mugur Isărescu noted that the trajectory is marked by fluctuations, according to Economedia.

During BNR’s quarterly report on inflation, Isărescu also noted that while term deposits held by Romanians were higher than consumer credits until the end of 2023, this trend has reversed in recent months. Now, consumer credits have significantly surpassed term deposits, which raises concerns for the central bank, particularly in terms of inflation. Isărescu emphasized that this shift does not imply that people have stopped saving, but rather that consumer credits are growing at a rapid pace. According to Ziarul Financiar, he described this increase as "vigorous," signaling that it could have implications for inflation control.

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