Significant increases for gas prices and cheaper electricity prices in July, the central bank estimates. Inflation will reach 4.1% by the end of the year

The National Bank of Romania estimates that gas prices will rise by 10% in July, when consumers will have to sign new contracts, while electricity will become cheaper by 5%, after a strong increase of 18% since the beginning of the year, led by higher-than-expected inflation rates. The NBR forecasts the inflation rate will reach 4.1% by the end of this year.

“The trajectory of natural gas prices is marked by a significant increase in July, amounting to 10 percent, in the context of forecasting upward adjustments on the occasion of the annual renewal of contracts between suppliers and final customers, amid significant increases in quotations on the Romanian Stock Exchange of Goods. Subsequently, in the absence of relevant information, no other important change in prices is anticipated until the forecast horizon “, the NBR says about the gas price this year.

Also, with regards to electricity prices, the NBR states: “After a substantial increase in January (18.4 percent) in electricity prices, the forecast provides for a downward adjustment in July of about 5 percent, under the conditions of the commercial discounts that would be offered by the suppliers in order to compensate the difference between the price of the universal service and the one related to the best offer in the portfolio ”. However, the central bank emphasizes that the price trajectory remains marked by high uncertainties, in the context of the behavior of large suppliers to show a relatively high degree of rigidity of supply on the free market.

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More specifically, the NBR states that the price adjustments observed so far aim at upward corrections of more advantageous offers, towards the market average. Otherwise said, suppliers with lower prices will increase them, in order to get closer to the offers of those with higher prices.

The NBR shows in its inflation report published on Friday that the annual inflation rate is projected on an upward trajectory until the end of this year when it is expected to reach 4.1 percent, a level above the upper limit of the target range.

Subsequently, the annual inflation rate is expected to slow significantly in the first quarter of 2022, subsequently stabilizing at 3% by the end of the forecast period, respectively the first quarter of 2023.