CEE: Food price index rises, posing inflation risks

On the radar

• Czechia posted current account surplus in March (CZK 42.54 billion).
• Serbia and Poland recorded current account deficits in March.
• Romania’s current account is in deficit of EUR 7656 million since the beginning of the year.
• 1Q25 Romania’s GDP landed at +0.0% q/q and +0.2% y/y.
• Net wage growth reached in March + 9.8% y/y in Romania.
• Slovakia’s 1Q25 GDP was at 0.9% y/y and 0.2% q/q.
• Poland will publish flash estimate of 1Q25 GDP at 10 AM CET while Slovenia at 10.30 AM CET.
• Poland will also release final inflation for April.

Economic developments

We continue the topic of price development and look at the Food Price Index today. The Food Price Index has been increasing lately so in the months to come it seems reasonable to expect positive contribution to inflation stemming from higher food prices (as opposed to declining oil prices). The index remains elevated since 2021 and it went up to 128.3 in April, as increases in cereal, dairy and meat price indices outweighed decreases in those of sugar and vegetable oils. Prior to the inflation shock, the average value between 2015 and 2020 was at 95.3. After the inflation shock the Food Price Index declined visibly compared to the peak level of 160. Nevertheless, it went down below 120 level only briefly and remained above that threshold over the last year.

Market developments

Little has changed on the FX or bond market on the course of Wednesday. Ukraine’s Prime Minister Denys Shmyhal said that Ukraine has concluded all domestic procedures needed to launch the first cluster in the EU accession talks as the government approved the roadmap for the reforms. EU considers how to open the first chapter of negotiations with Ukraine in case Hungary blocks the opening of accession talks. Further, Hungary and Slovakia seek compensation from the EU for ending the imports of Russian fuels by 2027 as these two countries rely most on those supplies.

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