Romania inflation: right direction, high persistence

Bottom line: While headline CPI jumped in October, the move was expected. In-house seasonally adjusted core inflation dynamics show that momentum in various components is slowing, but the pace is slow and momentum remains elevated. We revise core and headline CPI higher, but only over the near term and make no change to end-27 forecasts. Inflation for October came in fully in line with our forecast and consensus at 0.8%m/m and 6.9%oya from 6.6% in September. Core was a tenth above our forecast at 0.5%m/m and still slowed to 6%oya from 6.1%. The seasonally-adjusted momentum slowed to about 4% annualized rate in October from almost 6% in September, with the 3m/3m saar at 5%. Core goods inflation continues to slow despite a succession of shocks from the exchange rate weakening, with October momentum below 4% saar, while core services remains sticky at 8.5% saar. Our revised forecast sees headline CPI reaching 7.3%oya at end-26, while end-27 remains unchanged at 4.3%oya, with core inflatio