Romania's inflation held firm at 4.9% in April 2025, according to ING's latest analysis. While the figures came in slightly below expectations, continued upward momentum in core categories, including furniture and household items, signals enduring challenges for consumers seeking cost stability in their everyday environments.
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'Today's data came in slightly below our expectations, but that's where the good news ends,' ING economists Stefan Posea and Valentin Tataru warned. The report highlights that while non-food item prices fell 0.7% on the month, mostly due to declines in gas and fuel, other areas, especially those impacting domestic comfort and interior needs, remained stubbornly high or continued to rise.
Services inflation showed particular resilience, increasing 0.5% month-on-month. Within this, transportation posted a notably stronger performance, but the trend of "widespread stickiness" across broader service categories may reflect underlying cost pressures affecting home-related service sectors such as repairs and maintenance.
Year-on-year, non-food inflation slowed to 3.6%, though this moderation masks sustained pricing power in essential durable goods. While detailed breakdowns are limited in the current snapshot, broader CPI trends suggest household equipment and furnishings remain prone to inflationary pressures, particularly as currency depreciation and fiscal uncertainty loom.
Core inflation, the metric that excludes food and energy, was unchanged at 5.3%, reinforcing concerns over persistent pricing dynamics in everyday products and services. 'The recent FX depreciation episode should start to gradually add upside pressures through the coming months,' Posea and Tataru cautioned. This suggests import-dependent sectors, including interior furnishings and decorative goods, may face renewed cost increases.
Looking forward, ING maintains its forecast for year-end inflation at 5.0% and a full-year average of 5.2%. However, the outlook is laced with uncertainty, especially tied to pending fiscal reforms. 'In the near term, risks to our inflation outlook could also come from the anticipated fiscal package, but this is very much dependent on the final form of the measures,' the ING team explained.
On monetary policy, no change is expected at the upcoming May meeting of the National Bank of Romania. Nonetheless, 'our base case remains for 50bp of cuts from the National Bank of Romania later this year, although for that to happen, most of the current risks to the outlook would need to vanish,' the economists added.
With stable energy costs offering temporary relief, Romanian households may still face rising prices for interiors, furnishings, and essential services well into the second half of the year. 'A return towards a credible fiscal path and no rating downgrade are key factors that could allow some mild policy easing,' ING concluded. Until then, consumers are likely to continue feeling the squeeze, especially at home.
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