Romania’s inflation eases in January but remains above 15%

Consumer prices advanced by only 0.34% in January, and the annual inflation eased by 1.3pp to 15.07%, the statistics office INS announced.

The deflation was steeper than expected in January, but only because of the tougher impact of the new electricity price regulations. Consensus expectations converge towards an 8% yearend inflation this year, in line with the central bank’s projections.

Inflation thus decelerated for the second month in a row in January, but remained above 15% for the seventh consecutive month as well.

More than half of the 1.3pp drop in inflation, namely 0.7pp, was caused by the new electricity price regulation scheme that resulted in 15% smaller end-user prices (on average) compared to December.

Food prices rose by another 1.5% in January, and the annual pace accelerated to 22.5% YoY from 22% in December. Similarly, the price of services advanced by 1.8% compared to December and gained momentum, yet at a very different level: 10.3% YoY compared to 9.8% YoY in December.

The prices of telecom services actually decreased by 0.1% YoY, while those in HoReCa and transport services advanced by around 15% YoY.

The prices of non-food goods, dragged down in January by the new electricity price regulations, inched down marginally compared to December, and the annual increase decelerated visibly to 11.9% YoY from 14.9% YoY in December.

The price of medicines posted the slowest annual advance (+5.7% YoY) due to the tight regulations frequently causing shortages for some categories. The price of fuels increased by only 0.8% compared to December (+9.4% YoY), even if the Government terminated the subsidisation scheme.

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