According to the latest release by the Romanian National Institute of Statistics, the country’s CPI decreased 0.1% MoM, and increased 5.1% YoY in May 2024.
Last week, the Romanian National Institute of Statistics released the CPI read for Romania, for May 2024. According to the release, Romanian CPI decreased by 0.1% MoM and increased by 5.1% YoY. Looking at the growth drivers, on an MoM basis, services increased by 0.4%, while food and non-food goods had a decrease of 0.02% and 0.4%, respectively. In contrast, services experienced the biggest growth of 9.3% YoY, while food goods prices grew by 1.2%, and non-food goods prices by 6.4%.
Romanian CPI (January 2020 – May 2024, %)
Source: Romanian National Institute of Statistics, InterCapital Research
Furthermore, the Romanian National Institute of Statistics reported The Harmonised Index of Consumer Prices (HICP) – an indicator for determining inflation across the EU. According to this index, inflation in May compared to one in April increased by 0.03%, while the YoY inflation rate grew by 5.8%.
Comparison of Romanian HICP with other European countries (May 2024, YoY, %)
Source: Eurostat, Romanian National Institute of Statistics, InterCapital Research
Compared to Eurostat’s euro area annual inflation expectations released at the end of May, Romania had the highest HICP, followed by Belgium at 4.9%, and Croatia at 4.3%. In line with Eurostat’s expectations, services were the main driver of inflation growth with the forecast of 4.1% YoY in the euro area. Moreover, the top drivers of such a YoY CPI growth within Romanian services were the following sectors: Water supply, sewage collection, refuse collection (15.5%), Medical care (12.5%), Restaurants, cafés, canteens (11.0%).
Meanwhile, on a MoM basis, Malta recorded the largest increase in HICP, at 1.6%, followed by Cyprus at 1.2%, Portugal at 1.1%, as well as Ireland and Latvia, both at 0.5%, respectively. Romania was actually one of the best performers on this metric, ranking just above Estonia, Austria, and Finland, which did not record a MoM HICP change, as well as Greece, which actually recorded a slight deflation of 0.3% on a MoM basis.
Comparison of Romanian HICP with other European countries (May 2024, MoM, %)
Source: Eurostat, Romanian National Institute of Statistics, InterCapital Research
In summary, Romanian inflation is above many of the European countries, which means that it is unlikely that the Romanian Central Bank will reduce the deposit interest rates until the inflation comes down further. While higher inflation is expected in a country with its own currency, especially in periods of macroeconomic and geopolitical uncertainty, May’s CPI print shows there are still ways to go before inflation is fully under control.
