Consumer price inflation in Romania (chart) eased marginally to 9.69% year on year in December from 9.76% in November as prices rose by only 0.22% month on month at the end of the year, according to data published by the national statistics office INS. The reading was in line with the Bloomberg consensus median and slightly above the National Bank of Romania’s 9.6% projection issued in November.

Food prices increased by 7.8% year on year in December, while non-food prices rose by 10.5% and services prices climbed by 11.0%, INS data showed. Despite the modest monthly rise, inflation remained elevated after a sharp acceleration during the summer months.

A more detailed breakdown suggests inflationary pressures have already normalised after the summer shock. Annualised inflation over the four months following the spike stood at 4.6%, after average consumer prices jumped by 4.8% in just two months in July and August. The surge followed electricity price liberalisation and a value-added tax rate hike. By comparison, annualised inflation in the same period of 2024 was 4.4%.

Average inflation accelerated to 7.1% in 2025 from 5.5% in 2024, reflecting the impact of fiscal and regulatory changes. However, it is expected to ease to 6.5% this year and slow further to 3.2% in 2027 as base effects fade and domestic demand remains subdued.

Looking ahead, the headline annual inflation rate is expected to fall sharply in July and August and could end the year broadly in line with the central bank’s 3.7% projection. Economists attribute the expected decline partly to weaker demand conditions and favourable base effects following last year’s price surge.

Such dynamics are supportive of policy rate cuts, likely to bring down the policy rate from 6.5% currently in the range of 5.25%-5.5% by the end of the year. The central bank will not wait for the headline inflation to plunge during the summer, but may operate the first cut, depending on the price dynamics during the first part of the year. 

Adjusted CORE2 inflation, which excludes administered prices, volatile items, tobacco, alcohol and electricity and is closely monitored by the National Bank of Romania, accelerated slightly to 8.5% year on year in December from 8.4% previously, according to estimates by Erste Research.

Within the core basket, core food inflation rose to 8.5% from 8.3%, while core non-food inflation increased to 5.1% from 4.9%. Core services inflation edged up to 10.5% from 10.4% in November.

Assuming no additional shocks, Erste Research expects core inflation to end 2026 at 3.8% year on year, broadly tracking the headline rate due to base effects.