Romania’s 8.8% y/y inflation announced by the statistics office for September was slightly below the central bank’s inflation forecast (8.9% y/y), but slightly above the market’s 8.7% expectations.

“Romanian inflation is stickier than expected,” an ING Bank research note reads, noting that the bank’s analysts were expecting an 8.45% reading for the month in line with the yearend 7.1% y/y forecast. ING noted that price pressures have marginally exceeded its estimates in pretty much all categories, with service prices posting the largest deviation. This kept core inflation at 11.4%, also slightly above ING’s estimate of 11.2%.

The central bank expects 7.5% y/y inflation at the end of the year. The monetary policy rate is expected to be kept unchanged at 6% for at least by the end of the year, with the first rate cuts being envisaged in Q1 next year or even later given the possible inflationary impact of the fiscal package to be enforced in January.

In September, the average consumer prices increased by 0.79% m/m, the steepest monthly advance since March.

Energy prices picked up in the month, with electricity by 1.6% and fuels by 2.0%, although they, while the price of municipal utilities (water distribution) increased by 3% in September and by 20% y/y (thus contributing 0.5pp to the overall 8.8% CPI inflation).

On an annual basis, food prices increased by 10.4%, non-food prices by 6.7% y/y and the average price of services increased by 12.1% y/y. The largest contribution to the annual inflation came from medicines (+0.6pp), cosmetics and hygiene (+0.5pp), municipal utilities (+0.4pp), and certain food products (milk and dairy 0.5pp, bread 0.4pp, meat products 0.4pp).