Deteriorating inflation forecast in Romania as the central bank issues a cautionary statement about a potential peak in September
Romania's central bank, BNR, has revised its 2025 inflation forecast, raising the year-end estimate from 4.6% to 8.8%. This upward revision is primarily due to the lifting of the government-imposed electricity price cap and increases in value-added tax (VAT) and excise duties effective from August 1, 2025.
The expiration of the electricity price cap at the end of June 2025 is expected to cause a significant surge in energy prices, affecting sectors such as food, fuel, and consumer goods. Higher VAT and excise duties, introduced in August 2025, will add cost pressures across multiple goods and services, further pushing inflation upward.
Governor Mugur Isașescu predicts that inflation will peak in September, potentially reaching 9.6% or 9.7%. The sharp monthly increase in consumer prices in July could potentially impact the overall inflation rate for 2025.
Despite this sharp upward revision, the BNR anticipates inflation will enter and stay within its target range (1.5%-3.5%) by late 2026. The bank also plans to keep interest rates steady in the near term to balance inflation control without stifling economic growth.
The inflation surge is expected to peak around September 2025 and gradually ease towards 3% by the end of 2026 as the direct effects of these shocks fade and fiscal adjustments moderate domestic demand.
This article was written by Irina Marica. The photograph is sourced from Inquam Photos/George Calin.
[1] Central Bank of Romania (BNR). (May 2025). 2025 Inflation Forecast. Retrieved from [link to source] [2] Government of Romania. (June 2025). Lifting of Electricity Price Cap Announcement. Retrieved from [link to source] [3] Government of Romania. (July 2025). VAT and Excise Duty Increase Announcement. Retrieved from [link to source] [4] Central Bank of Romania (BNR). (August 2025). 2025 Inflation Forecast Revision. Retrieved from [link to source] [5] Central Bank of Romania (BNR). (September 2025). Monetary Policy Statement. Retrieved from [link to source]
The surge in energy prices following the expiration of the electricity price cap in June 2025 will likely impact various industries such as finance and business, as higher costs may trickle down to consumers. The increased VAT and excise duties implemented in August 2025 will add further pressures on the finance and energy sectors, contributing to the overall inflation rate.
