Romania Ends a Turbulent Political Year with Inflation Close to 10%

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Consumer inflation in Romania reached 9.7% year-on-year in December 2025, Bloomberg reports, citing data from the National Institute of Statistics. The figure edged down only slightly compared with November and came in above the central bank’s forecast of 9.6%. On a monthly basis, inflation stood at 0.2%.

The current inflation rate is almost three times higher than the upper bound of the National Bank of Romania’s target range, set at 3.5%. According to the regulator, the key drivers behind accelerating price growth were government measures to reduce the budget deficit, as well as the removal of the energy price cap.

In 2025, the authorities implemented a series of tax hikes in an effort to cut the budget deficit, which had exceeded 9% of GDP, to below 8.4%. These steps were taken against the backdrop of the most serious political crisis in the country since the fall of the communist regime. However, the combination of fiscal tightening and energy price liberalization had a stronger inflationary impact than expected, central bank Governor Mugur Isarescu noted.



Despite elevated inflation, the regulator has kept the key interest rate at 6.5% since mid-2024. The authorities expect a noticeable slowdown in price growth in the second half of 2026. According to a forecast by Raiffeisen Bank, inflation could ease to 4% by the end of the year, creating room for monetary policy easing.

Raiffeisen Bank economist Nicolae Covrig expects that, as inflation declines and fiscal consolidation continues, the central bank could resume its rate-cutting cycle as early as May, bringing the benchmark rate down to 5.25% by year-end. In his view, current price dynamics suggest a significant easing of inflationary pressure over the course of 2026.

According to the European Commission’s forecast, Romania’s economy will grow at a moderate pace of around 1.1%. This reflects weak domestic demand amid fiscal consolidation and only a gradual recovery in private investment and exports. The forecast also points to a further slowdown in inflation, although it is expected to remain above the central bank’s target range in the first half of the year.

The Organisation for Economic Co-operation and Development (OECD) expects growth of about 1%, accelerating to roughly 2.2% in 2027. In its analytical outlook, the OECD highlights that fiscal consolidation measures, including VAT increases and the freeze of certain social payments, will continue to restrain consumption and real income growth until mid-year. The organisation assumes that the key rate will remain unchanged until the end of the third quarter of 2026, after which a gradual easing cycle may begin.

The International Monetary Fund (IMF) forecasts moderate economic growth in Romania of around 1.4% in 2026. IMF experts stress that inflation risks remain significant due to pressure from energy prices and tax policy, and recommend continuing structural reforms to strengthen the country’s economic potential.

Forecasts by private analysts, including ING, also point to a gradual decline in inflation to about 4.5% by the end of 2026. In this scenario, weaker domestic demand and the high base effect from the previous year could allow the central bank to start cutting the key rate as early as mid-year, provided the current disinflation trend is sustained.



Analysts at International Investment note that Romania entered 2026 in a phase of “stabilisation after overheating”. The key challenge for the authorities is to strike a balance between reducing the budget deficit and supporting business activity. If forecasts of slower inflation are confirmed, the country could shift from a containment strategy to gradual recovery in the second half of the year, although the scope for accelerated growth in the near term remains limited.