Romania’s headline inflation edged up slightly to 4.67% y\/y in October from 4.62% y\/y in September, as the prices increased by 0.67% m\/m, according to data published by the statistics office INS.<\/p>\n
The small advance came amid analysts’ expectations for a marginal slowdown witnessed by a Bloomberg survey median of 4.6% y\/y. Most of the forecast error from our side came from volatile food items, Erste Research (which expected 4.4% y\/y inflation in October) explained in a research note.\u00a0<\/p>\n
Further acceleration to 4.9% y\/y is anticipated by the central bank (BNR) by the end of the year, and after that, it all depends on the government’s fiscal and budgetary corrective package.\u00a0<\/p>\n
Under the baseline scenario, Romania’s inflation would drop to 3.5% y\/y by the end of 2025, but BNR sees multiple sources of uncertainty and consequently kept this month the monetary policy rate at 6.5%, which is in line with a moderately restrictive posture. Further rate cuts depend on the fiscal and budgetary package’s calendar and structure.<\/p>\n
The CORE2 inflation edged down marginally to 5.6% y\/y in October \u2013 while still remaining above the headline inflation that is constrained by the controlled prices.<\/p>\n
Thus, the average price of the energy basket, including natural gas, electricity, and heating, decreased by 6.5% y\/y as of October. Some food prices are also controlled \u2013 but the food prices as a whole increased slightly faster than the headline inflation, by 4.75% y\/y.\u00a0<\/p>\n
The prices of services marked the fastest annual advance, +7.66% y\/y in October, witnessing a robust rise in households’ incomes. The prices of non-food goods were dragged down by the energy prices and rose by only 3.45% y\/y as of October.<\/p>\n