The industrial prices (factory-gate prices) index in Romania increased by nearly 14% y/y as of July, after a 2.3% m/m monthly leap, keeping the inflationary pressure at a high level.
The big picture suggests that the higher energy prices have not yet passed through to the consumer prices and therefore further supply-side inflationary pressures are expected.
In the energy sector, the industrial prices soared by 31% y/y after another major advance seen in July (+6.6% m/m), announced the statistics office, INS.
The prices of the intermediary goods increased by only 1.8% m/m in July but compared to a year ago they are 17.3% higher — an annual advance that is three times bigger the advance of the prices of the durable and non-durable consumer goods (+5-6% y/y).
Consumer price inflation neared 5% y/y as of July, up from under 4% as of June.
Food prices in Romania will increase by 10-12% in the coming months, as a result of higher energy prices and higher import prices, according to estimates of the president of the National Federation of Trade Unions in the Food Industry Sindalimenta, Dragos Frumosu.
Higher energy prices alone will generate a 6-7pp increase.
As of July 2021, food prices were up 2.3% y/y, less than half the headline consumer price inflation (5% y/y).
Nevertheless, the average prices of the energy inputs soared by over 30% as of July (Frumosu spoke of a 100% rise in energy prices faced by food processors), which generates significant inflationary pressures.
Separately, the global food price index compiled by the UN's Food and Agriculture Organisation (FAO) surged by nearly 30% y/y as of August.
Romania imports 25% of the milk it needs, 70% of the pork and a significant share of beef, Frumosu explained, implying that higher global prices will quickly be imported as well.