Romania's wage rally eases to 4.7% y/y in February, further slowdown expected

The average net wage in Romania remained constant in February (+0.4% m/m), but this was enough to result in a significant 9.7% y/y advance (+4.7% y/y in real terms), according to data published by the statistics office INS. In absolute terms, the net average wage reached RON 5,351 (EUR 1,075) in February.

In euros, the net average growth rate was +9.7% y/y.

In the core manufacturing sector, the wages increased by 11.2% y/y (+6.1% y/y in real terms) to RON 4,808 in February.

The annual growth rate in Romania, which peaked above 8% y/y during 2024 when it averaged +7.4% y/y, will predictably further diminish later in the year, with an impact on retail sales. Accordingly, the economic growth will lose the support it felt over the past year from private consumption. On the upside, subdued private consumption is likely to be conducive to disinflation in line with the central bank's projections.

The retail sales volume has already stagnated for six consecutive months, and the annual growth rate eased to +1.1% y/y in February. Inflation missed by 0.26 basis points the 4.6% y/y March inflation target.

The base effects will be seen starting in March 2025.

Net wages increased on average by 6.4% m/m in March 2024, when double-digit permanent adjustments were operated in various industries such as tobacco processing, oil refining, construction materials production, and automobile production. Wage hikes of such magnitudes are unlikely this year, given the high macroeconomic uncertainty and the companies' cautious stance in front of possible tax hikes.

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