The National Bank of Romania has revised the inflation forecast up from 4.6% to 8.8% for the end of 2025, after the removal of the cap on energy prices which were not taken into account.
“Romania is not in recession, but there is this risk,” the central bank governor Mugur Isarescu said on Tuesday. He warned that political stability and “a certain degree of social peace are essential.”
Isarescu on Tuesday presented the Quarterly Inflation Report, as inflation jumped by more than two percentage points to 7.84%.
Inflation jumped by 2.7% in a single month in Romania in July 2025, to an annual rate of 7.84%. The reason was the removal of the electricity price cap on July 1 which led to an average 61% increase in electricity bills, according to a report from the National Institute of Statistics.
The government has hiked VAT and other taxes, lifted energy caps and is cutting tens of thousands of public jobs to reduce the ballooning budget deficit of more than 9% last year.
“We are not in a dead-end situation, but fiscal consolidation must be done gradually and it must be accepted that we have no other solution,” the governor explained.
Inflation to peak in September
He announced the new inflation targets for 2025 and 2026, with the current forecasts unfeasible. In the last inflation report, the bank predicted inflation of 4.6%, slowing to 3.4% for 2026.
“In September, it will probably peak, instead of 9%, it will probably be 9.6-9.7%, after which there will be a gradual absorption of these shocks and, indeed in our forecast, at the end of next year, inflation will not only enter the target range, but will be even lower than the inflation forecast in the previous inflation report…. At the end of the year, 8.8%. It will probably exceed 9%,” he said.
