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Lower inflation, cheaper homes

The inflation rate has seen a slight decrease in Romania, while apartments in big cities are becoming cheaper.

Lower inflation, cheaper homes
Lower inflation, cheaper homes

, 14.06.2023, 13:50


The inflation rate continued to drop in May, although food, services and non-food products saw further price hikes. According to the National Institute for Statistics, the annual inflation rate, as against May 2022, dropped to 10.64% from 11.23% in April. The highest increase in May was seen in the price of food products, which grew by 0.8% compared to April, and that of non-food products, by 0.4% compared to April. Fruit and vegetables especially saw steep price hikes, with the price of potatoes going up by over 11% on average and that of fresh fruit by 4.7%. Among services, the highest price hikes were in the area of hotel accommodation, which grew by 2.8%, and electricity, which grew by 2.2%. Some products did become cheaper, such as cow milk, which dropped by 5.7%, fuel, which dropped by almost 2.6%, cooking oil and eggs.



Economy expert Constantin Rudniţchi told Radio Romania that the slowdown of the inflation rate stimulates investments and economic growth. He added that the inflation rate is expected to enter single-digit territory in the second part of the year. Experts are warning, however, of the average gross salary growing above the inflation rate. According to the figures for April published by the National Institute for Statistics, the average net salary income grew on average by 15% compared with the same month last year. “The increase in salaries we already see in the public administration, in the education sector, in fact, which leads to another 3-4 billion lei thrown in on the market this year, may lead to a rise in the inflation rate”, Constantin Rudniţchi warns. He says it remains to be seen what impact this money will have in the consumption area and that he fears Romania may enter a vicious circle, whereby pay rises may drive or maintain the inflation rate at above 10%. In April, the average net salary in Romania was around 900 euros. The highest salaries are in IT, with over 2,000 euros, and the lowest in the hotel and restaurant business, with around 500 euros.



The macroeconomic uncertainty has also affected the real estate market, experts say. The price of homes in big cities went down slowly but steadily in the first three months of the year. The explanation for this is the loss of purchasing power by the population caused by the high inflation rate and more expensive loans. The biggest drop was seen in the price of 3-room apartments built before 1977, when a devastating earthquake led to stricter building regulations to make buildings more resistant to earthquakes. (CM)


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