Matei Susnea has criss-crossed Bucharest's frosty streets in search of a Christmas tree he can afford, but with prices of everyday items surging, he fears he and his family will have to do without this year.
Like millions of others, the 42-year-old Romanian construction worker is feeling the pinch from a rise in inflation that is gathering breadth and pace across Central and Eastern Europe, a consequence of supply-chain frictions, tight labour markets and upward pressure on wages.
But, in evidence of what economists and central bankers call second-round inflationary effects, wages are already creeping higher and employers as well as consumers are starting to adjust their behaviour. In the Czech Republic, a fifth of employees are ready to switch jobs if their wages fail to rise in line with prices, a November survey by the STEM/MARK agency found. Meanwhile, more than half of industrial firms will hike prices by over 5% next year, an October business alliance survey showed.Latest data put inflation at around 7% across the region, and at its highest in two decades in Poland, 13-year-highs in the Czech Republic and Romania and a 14-year-high in Hungary.
Further rate hikes will have a dampening effect, he said, but big-spending budgets, especially in Poland and Hungary, could pile the pressure on again. Food for Life, a charity that provides free meals to over 13,000 poor Hungarians, has been forced to slash the range of goods in its food donations to a dozen items from around 22 in previous years, skipping costlier items because prices "are sky-high", said its head Attila Szanyi-Karl while packing donations.
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