The industrial production price index, also known as factory-gate price inflation, eased to 8.8% y/y (+0.7% m/m) in July from double-digit readings in May-June, driven by base effects. Factory-gate price inflation accelerated in H2 last year following the liberalisation of electricity prices and, more recently, amid the war in the Middle East – both episodes pushing energy prices to levels not seen since the first stage of the war in Ukraine.

The moderation of producer-price pressures parallels the recent softening of consumer price inflation, which has also benefited from base effects. The National Bank of Romania has nevertheless raised its full-year inflation forecast to 6.1%, on expected elevated fuels and electricity prices, with consumer inflation not expected to return to the central bank’s target range of 2.5% plus or minus 1 percentage point before the end of  2027.

Prices in the oil refining industry rose by 5.48% m/m and 44.86% y/y in July. Prices in this industry were 66% above their 2021 average, broadly in line with the overall increase in industrial prices.

Overall, energy prices (electricity, gas and heating) decelerated on base effects to 10.0% y/y in July from above 20% y/y during Q2, but remain elevated. The tight electricity market expected this autumn is likely to generate further inflationary pressures. Average energy prices were 157% above their 2021 average in July.

Prices of durable and non-durable consumer goods rose at relatively moderate rates of 3.3% y/y and 5.0% y/y, respectively, in July. They were 36% and 51% above their 2021 averages, respectively, indicating below-average growth in this segment.

However, prices of intermediate goods rose by 11.4% y/y, reaching 42% above their 2021 average. The annual increase accelerated from 10.2% y/y in June, 9.1% y/y in May, and 5.1% y/y at the end of last year, generating further pressure on consumer prices.

iulian@romania-insider.com

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