Romania’s inflation steady in April, expected rate rises with weaker currency outlook

Romania’s headline inflation remained steady at just under 4.9% y/y in April, in line with consensus expectations, as the average prices increased by a mere 0.07% in the month, according to the data published by the statistics office INS on May 13. Core inflation remained at 5.3% y/y as well.

The National Bank of Romania (BNR) is expected to keep the monetary policy rate at 6.5% at its May 16 monetary board meeting, while expectations about the next rate cut range from August to after the end of 2025.

A weaker currency outlook or only expectations for frontload currency depreciation, prompted by the episode on the FX market last year, encouraged upward revisions of the inflation forecast.

Thus, Erste Research has revised its yearend forecast upward from 3.7% to 4.0%, while BNR will most likely publish early next week, along with the quarterly Inflation Report.

Erste also revised the end-2026 inflation forecast to 3.4% from 3.0%. Core inflation is expected to be above headline inflation throughout the period. Notably, the projection is drafted under a no-change tax scenario, while a tax revision (not necessarily a VAT tax hike) is almost certain after the presidential elections on May 18.

April’s modest overall price increase masked diverging trends across categories. Food prices rose by 0.83% m/m, pushing annual food inflation to 5.6% y/y. In contrast, non-food items recorded a 0.65% m/m monthly decline - mainly due to lower natural gas prices - resulting in a 3.5% y/y.

Service prices grew by 0.48% m/m in April and by 6.8% y/y, with utility tariffs increasing 1.1% from March and 12.6% compared to April 2024.

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