Brussels, April 17, 2023 – Inflation is starting to deflate in most states in the European Union, excluding Hungary, which continues to break all records.
The euro area annual inflation rate was 7.0% in April 2023, up from 6.9% in March. A year earlier, the rate was 7.4%. European Union annual inflation was 8.1% in April 2023, down from 8.3% in March. A year earlier, the rate was 8.1%. These figures are published by Eurostat, the statistical office of the European Union.
The lowest annual rates were registered in Luxembourg (2.7%), Belgium (3.3%) and Spain (3.8%). The highest annual rates were recorded in Hungary (24.5%), Latvia (15.0%) and Czechia (14.3%). Compared with March, annual inflation fell in twenty-two Member States and rose in five.
In April, the highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+2.75 percentage points, pp), followed by services (+2.21 pp), non-energy industrial goods (+1.62 pp) and energy (+0.38 pp). The highest inflation rates are recorded in the Eastern Bloc of the EU. All the states in this area have an inflation rate higher than the EU average. After Hungary and Czechia, Slovakia and Poland follow with an annualized rate of 14.0%, then Bulgaria, Slovenia and Croatia, with inflation rates of 10.3%, 9.2% and 8.9%.
It is worth noting that the eastern flank of the EU is the most affected in terms of GDP growth, proof that the effects of the war in Ukraine have spread, primarily against these states.
In Romania, the annual inflation rate in April was 10.4%, compared to 12.2% in the previous month.
Compared to March 2022, the annual inflation rate decreased in 22 member states, including Romania, and increased in five countries.
On the other hand, Eurostat data show that in the euro area, the annual inflation rate increased slightly from 6.9% in March to 7% in April. This although core inflation, i.e. what remains after the prices of volatile goods such as energy and food are removed, fell to 7.3%, from 7.5%. Another indicator that, in addition to energy and food prices, also excludes cigarette and alcohol prices, also fell to 5.6%, from 5.7% in March.
Core inflation is the indicator closely followed by the ECB when elaborating its monetary policy decisions. For almost two years, this indicator has been above the ECB’s target of 2%, even though the euro’s guardians increased the cost of credit by 375 basis points starting in July last year to stop the accelerated rise in prices. The ECB’s main concern is that services inflation, which in the case of the euro area accelerated to 5.2% from 5.1% in March, is far too high and could signal that wages are becoming an important issue as service prices are mainly determined by labor costs.
In the case of Romania, the National Institute of Statistics (INS) previously informed that the annual inflation rate fell to 11.23% in April 2023, from 14.53% in March 2023, as food prices rose with 19.84%, non-food with 5.83%, and services with 10.64%. According to the cited source, the harmonized index of consumer prices in April 2023 compared to March 2023 is 100.78%. The annual inflation rate in April 2023 compared to April 2022 calculated on the basis of the harmonized consumer price index (HICP) is 10.4%. The average rate of change in consumer prices in the last 12 months (May 2022 – April 2023) compared to the previous 12 months (May 2021 – April 2022) determined on the basis of the HIPC is 13.0%.
At the end of last week, the National Bank of Romania (BNR) revised upward the inflation forecast for the end of this year to 7.1% and maintained the estimate of 4.2% for the end of 2024.
In November 2022, the NBR estimated an inflation of 11.2% for the end of 2023. In February 2023, the central bank revised down the inflation forecast for the end of this year to 7% and estimated an inflation of 4.2% for the end of 2024.
“Let’s look at the forecast and the predicted trajectory of inflation: it almost overlaps the previous one. At the end of the year, the model shows us 7.1%, but I’m sure that if they entered the last figure, of the last month’s inflation, from April, it would probably still be at 7%,” explained the BNR governor, Mugur Isărescu, on Friday.
Inflation in the EU: Hungary is the champion again in April. Romania shows a significant decrease in the Eastern Bloc
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