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The recent surprise increase in electricity prices in Romania has pushed inflation close to 8%YoY. As Romania begins to rollback inflation fighting policies in the next couple of months, Turnleaf expects inflation to remain hot through July-2026 once base-effects are removed from YoY calculations. Sharp increases along the inflation curve mainly correspond to unfolding inflation policies that helped subdue prices in the last year.

In August 2025, standard VAT increased from 19% to 21% impacting up to 85% of the consumer basket, while VAT on hospitality increased from 9% to 11%, putting upwards pressure on services. Fuel and tobacco excise taxes also increased 10%, while sweetened beverages excise tax saw a 20% hike. The following month, the food price markup cap on 17 basic food items covering about 13% of the consumer basket will also expire, putting some upwards pressure on food inflation (8.18%YoY) that has been increasing steadily since the beginning of the year. Finally, by April 2026, the price cap on natural gas will be removed. Romania’s role as the largest natural gas producer in the EU with big ambitions to increase supply and global natural gas prices trending downwards indicate that the removal of the cap is likely and that the subsequent price increases may be muted.

With higher electricity prices becoming a main driver of heightened input costs, selling price expectations over the next 3 months have increased considerably (Figure 1).

Interestingly, the recent MoM increase in mining and quarrying production (Figure 2)—which lies outside typical seasonal patterns—appears linked to the EU’s Critical Mineral Act enacted in March 2025. This development may amplify the impact of higher electricity costs on producer prices, with potential pass-through effects to consumer prices. The extent and persistence of these pressures, however, will become clearer once producer price data for the sector are released in July 2025.

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