The average consumer prices in Romania rose by 1.8% in October, while the annual inflation rate reached 7.9% - a significant 1.6pp advance from 6.3% in September, according to data from the National Statistics Institute (INS).

The surge exceeds expectations, and, in this regard, the 25bp policy rate hike (even if accompanied by a 50bp hike of the Lombard rate) operated by the National Bank of Romania (BNR) the day before looks even more dovish.

In October alone, two-thirds (1.2pp) of the inflation was caused in roughly equal shares by the 21.3% monthly advance of the natural gas price and the 6.5% monthly increase in the fuel prices.

Over the past year, the two energy items plus a third one - electricity - accounted for over half of the 7.9% inflation rate. Thus, the natural gas price soared by 41% YoY and contributed 1.4pp to the overall inflation, the fuels prices rose by 23.5% YoY and contributed 2.1pp to inflation. The electricity price rose by 24.7%, contributing 1.1pp to inflation. By comparison, the food prices rose more moderately, by a still significant 5.3% YoY and the fees paid for services by under 4.0% YoY. 

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iulian@romania-insider.com