CEE: The world food price index on the rise

Erste Bank Research Team Erste Bank

On the radar

Moody’s affirmed Romania’s Baa3 sovereign rating, with the negative outlook maintained.
Today, Romania’s central bank holds a rate setting meeting.
At 8 AM CET Romania releases trade date.
Slovakia (9 AM CET) and Slovenia (10.30 AM CET) will publish industrial output growth.
Czechia releases share of unemployed at 9 AM CET.

Economic developments

Combination of adverse weather conditions and geopolitical risks as well as stronger energy-related demand make us look at the World Food Price Index development. It reached 131.1 points in July, compared with 124.5 in December 2025, corresponding to a cumulative increase of 5.3% since the beginning of the year. The recent increase points to some renewed pipeline pressure on consumer food inflation. If the World Food Price Index remains close to 131, the contribution to inflation is expected to be positive in roughly one year horizon. The pass-through into consumer prices is likely to be partial and delayed, however. Further, with the overall index only around 1% higher than a year earlier, the development currently represents a moderate upside risk to food inflation rather than a renewed shock comparable with 2022.

Market movements

Moody's reaffirmed Romania's Baa3 rating with a negative outlook, citing political risks around fiscal consolidation while projecting the 2026 budget deficit to narrow to 5.8% of GDP. Romania’s Finance Minister Alexandru Nazare said maintaining the country’s investment-grade sovereign rating will depend on the swift formation of a credible government with full powers, the completion of key milestones under the National Recovery and Resilience Plan and the adoption of a sustainable 2027 budget that demonstrates continued fiscal consolidation. Today, Romania’s central bank will announce interest rate decision, and no change is broadly expected. Last week, 10Y government bond yields declined across CEE, with Romania being the only exception. CEE currencies weakened slightly over last week, as uncertainty surrounding the situation in the Middle East contributed to higher oil price volatility. As for other news, President Vučić announced snap elections will be held within three months, likely in October or November, pledging to accept the outcome.

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Erste Bank Research Team

Erste Bank

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