Shoppers Unperturbed by Prices Help Explain Fastest EU Inflation
(Bloomberg) -- When it comes to shopping, Romanian consumers are the least likely in the European Union to spend too long worrying about prices. And that’s important for inflation.
According to Morgan Stanley, countries where people frequently use websites or apps to compare the cost of potential purchases are more likely to see slower growth in consumer prices. That may help explain why Romania’s inflation is the EU’s quickest, according to Eurostat.
“While inflation is still low in the central and eastern European countries, despite a tight labor market and rising consumption, Romania is the exception,” Morgan Stanley economist Pasquale Diana said in an emailed note. He predicts further interest-rate increases.
There are reasons for such carefree shopping habits. Romanians are among Europe’s least inclined to save and have seen their disposable incomes swell thanks to tax cuts and hikes to public-sector salaries and the minimum wage. The spending boom pushed economic expansion last year to almost 7 percent and sales of new cars hit a decade high in the first quarter.
But not everyone’s indifferent to prices – regulators, wondering whether stores are taking advantage of shoppers’ spending habits, have started an investigation into price fixing among retailers. The result could interest the central bank.
©2018 Bloomberg L.P.