The annual rise in Romania's industrial price index decelerated to 1.6% y/y in July from 2.8% y/y in June, the statistics office reported. The average industrial prices decreased by 0.4% m/m in July.
The local currency’s dynamics [strengthening versus the euro] contributed to the visible slowdown of the industrial prices' growth, but this can be only temporary. The main inflationary pressures are generated by the rising prices of utilities that are subject to liberalisation [heating, gas] and by the possible reversal in the exchange rate dynamics.
The exchange rate dynamics contributed significantly to the industrial price dynamics since the value of the euro expressed in local currency decreased by 1.1% m/m and 2.7% y/y in July. As a result, the prices in deals on the foreign market decreased by 0.9% m/m and 2.8% y/y.
Industrial prices in deals on the domestic market, however, also decreased on the month, by 0.2% m/m, while increasing by 3.8% on the year.
By type of goods, the prices of consumer goods increased by 5.6% y/y, while the prices of goods traded mainly on foreign markets [intermediary goods, capital goods] decreased on an annual basis. Particularly the prices of intermediary goods decreased by 1.7% y/y.
By industry, the prices in the utilities sector [electricity, gas, heating] increased by 7.4% y/y -- decelerating from the double-digit annual growth rates in May-Jun but still indicating the major source of inflationary pressures. On the opposite, the prices in the core manufacturing sector increased by only 0.3% y/y.
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