The National Bank of Romania (BNR) anticipates Romania’s mid-2026 annual inflation rate will be 7.9%, decreasing progressively from this point to 2.7% at the end of Q2 2027, shows the central bank’s Quarterly Inflation Report, August 2025 edition.
„With the conclusion of the electricity price capping scheme and the implementation of the fiscal consolidation package, the annual inflation rate will see substantial reconfigurations over the projection period, namely the next eight quarters. Thus, in the first part of the interval, the inflation trajectory is under the powerful impact of the July 2025 electricity tariff hike and of the rise in indirect taxes – VAT and excise duties – in August of the same year. The two shocks’ first-round effects are assessed at 2 percentage points each. The influence of these measures on the annual CPI inflation rate will persist for 12 months. From the second part of the forecast interval, the disinflationary effects of fiscal consolidation will become dominant, reflected in the diminution of aggregate demand, consumption and investment in particular. Under these circumstances, the forecast values of the annual inflation rate are 8.8% for the end of this year, 3 percent for December 2026, and 2.7% at the projection horizon, in Q2 2027,” the Report shows.
Compared to the projection in the Inflation Report released in May, the annual CPI inflation rate estimated for the end of 2025 is by 4.2 percentage points higher.
The BNR notes that, of this revision, the increase in indirect taxes accounts for 2 percentage points, and the previous underestimation of the impact of the electricity price hike – for another 1.5 percentage points.
On the other hand, the annual inflation rate for end-2026 is by 0.4 percentage points lower due to the revision of core inflation.
The BNR specifies that, despite some previously foreseen strong upside risks taking effect, the balance of the risks associated with the projection of the annual CPI inflation rate continues to be tilted upwards, indicating potential new upward deviations from the trajectory in the baseline scenario, particularly in the short term. Uncertainties persist regarding the evolution of administered prices, especially those for natural gas, as well as the possibility of new fiscal measures. These uncertainties also increase the risk of the anchoring of companies’ inflationary expectations getting weaker over the medium term.
AGERPRES
