Romania: Inflation drops to lowest level since April in December
Inflation decelerated to 16.4% in December, below Novembers 16.8%. The moderation was due to lower price pressures for non-food goods, which more than offset higher price pressures for food items and services.
The trend pointed up, with annual average inflation coming in at 13.7% in December (November: 13.1%).
Lastly, consumer prices rose a seasonally adjusted 0.37% over the previous month in December, slowing down from the 1.25% rise logged in November. December’s result marked the weakest reading since November 2021.
On the outlook, Valentin Tataru from ING commented:
“Robust wage advances will not necessarily trigger a consumption boom, but they should at least preserve purchasing power. While we do not anticipate a price-wage spiral, close attention should be paid to the topic, especially bearing in mind the approaching electoral cycle.”
Additionally, Nicolaie Alexandru-Chidesciuc from JPMorgan commented:
“The persistence in services inflation is common in the CEE region and it is linked to strong labour markets, ongoing wage growth and a shift in inflationary expectations. These are factors which makes us believe that, after a period of sharp disinflation, starting March 2023, there will be limited disinflation during 2024. We think that EU-funded projects will maintain tightness of the labour market or, at minimum, prevent any meaningful deterioration.”