The analysts estimate pressures generated by energy, fuel and RON depreciation will continue to influence prices, shortly after Romania National Bank maintained its benchmark interest rate at 6.5%.
September inflation was close to Erste estimate, of 6.63%, but above the Bloomberg survey median of 6.37% y/y. According to the analysts, fuel and energy prices were the main drivers of the reacceleration in inflation in September.
Core inflation was instead little changed from August, easing to 6.1% y/y from 6.2% y/y previously.
„Considering that the September reading came in line with our expectations, we revise our year-end inflation forecast to 7.0% y/y from 6.4% previously, as announced in our Instant Comment following the NBR decision on 8 October. One important aspect to highlight is that electricity prices did not increase as much as we had expected in September,” say Erste representatives.
A reason for caution for the coming months is related to the evolution of electricity prices. „This represents one of the main upside risks to our forecast and is likely the largest source of uncertainty. The recent RON depreciation should also begin to feed through into inflation over the coming months, while developments in the fuel market remain another source of concern”.
For next year, the outlook is more favorable, though. Erste cut its annual inflation forecast from 4.3% to 3.8% at the end of 2027. „The negative output gap and an eventual easing in global oil prices should help bring inflation down significantly next year, although we still expect it to end above the NBRs target band”.
Last week, the central bank kept its benchmark interest rate at 6.5% per annum. At the same time, the bank warned inflation is likely to climb again by yearend.
Erste expects the key rate to remain at 6.50% at least until May 2027, as core inflation is likely to stay sticky and is forecast to return within the NBRs target range only in the fourth quarter of 2027. „The disinflation trajectory next year, provided the fiscal stance remains firm, which in turn is contingent on political stability, should allow the NBR to begin easing”.
In monthly terms, consumer prices rose by 0.77% in September. Food prices increased by 0.17% m/m, mainly driven by higher prices for vegetables, meat, and dairy products. Non-food prices rose by 1.19% m/m, largely reflecting higher fuel prices. Services prices increased by 0.71% m/m, with gains spread broadly across categories.
(English version by Catalina Apostoiu)