Romania’s inflation begins ‘transitory’ episode in June

The consumer price inflation in Romania accelerated to 3.94% YoY in June, from 3.75% YoY in May, the statistics office INS announced. The upward shift was predominantly driven by a combination of diverse effects attributable to the post-Covid recovery cycle but also pushed up by independent elements (such as higher tobacco excises, electricity market liberalisation).

In June, the consumer prices increased by only 0.27% - the smallest monthly advance since November - but this was enough to result in higher annual inflation given the base effects generated by lower consumer prices during the Covid period last year.

Such base effects are likely to become more visible in the coming months, and the National Bank of Romania (BNR) expressed in advance expectations for such a “transitory” inflation episode. The average consumer prices dropped during August and September last year, and this is likely to surface as higher inflation in 2021.

As regards the picture as of June, more than half of the 3.94% YoY inflation was caused by only three items: fuel prices rose by 11.8% y/y contributing +1.03pp, the electricity price rose by 17% YoY and contributed +0.79pp, and the tobacco prices increased by 7.0% and contributed +0.43pp.

Among the three, only the fuel prices can be seen as an effect of the post-pandemic recovery cycle.

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