The 18.4% increase in the average electricity prices in January pushed up the headline inflation to nearly 3%, some 0.5pp above the 2.1-2.5% interval previously estimated by Romania's National Bank (BNR).

While BNR factored an inflationary impact of the liberalization in its inflation outlook, the uncontrolled liberalization ended with a much higher one (that might be partly reversed in the coming months, though).

Specifically, the electricity price hike contributed 0.8pp to the 3.0% annual inflation in January and 0.9pp to the 1.1% monthly inflation in the same month.

In principle, the "universal service" price charged by default by the electricity suppliers in January might be offset by deductions calculated in the coming months and by lower prices set under the new contracts signed on the free market.

In January, the food prices were 2.9% higher than one year earlier, the non-food prices by 3.3% (out of which 0.9pp due to electricity), and the average fees paid for services were 2.5% higher.

Apart from electricity, only the prices of beans (+17%) and edible oils (+10%) increased by double-digit rates.

The fuel price was still 3% lower in January compared to the same month of 2020.

(Photo: Pexels)

iulian@romania-insider.com