The bank’s downward revision is due to steep inflationary shocks following the end of the electricity price capping scheme and increase of VAT rates and excise duties.
The inflation projection for end-2026 was also revised upwards to 3.7%, above the upper end of the 1.5% – 3.5% target band, the central bank said in its November 2025 inflation report. Inflation is expected to re-enter the target band in the first quarter of 2027, and to stabilize at 2.9% at the end of the forecast horizon, in the third quarter of 2027.
“Compared to the projection in the August 2025 Inflation Report, the new path shifted higher all through the forecast interval: by 0.8 percentage points at the end of this year, 0.7 percentage points in December 2026 and 0.3 percentage points [from 2.7%] in 2027 Q2, the forecast horizon of the previous report. This revision mainly reflects an upward reassessment of core inflation and an underestimation of the effect of the electricity market liberalization, only partially offset by a lower-than-expected pass-through of the VAT hike on volatile food (VFE) and fuel prices,” the central bank noted.
Romania ended the the capping of electricity prices on June 30, after the government extended the scheme for three more months beyond its previous end-point of March 31. For natural gas prices, the scheme was extended by one more year.
“Domestically, the most important risks to developments in inflation stem from administrative and fiscal decisions, in a context marked by inflation persistence. Specifically, the expiry of the natural gas price capping scheme scheduled for April 2026 is viewed as a watershed: full market liberalization could push these prices sharply higher,” the central bank said. “Concurrently, the removal of the cap on the mark-up on basic food products, also foreseen for April 2026, could exert additional inflationary pressures, especially in cases where supply chains remain vulnerable to multiple disruptive factors.”
In September, the government extended mark-up caps on some basic food products until March 31, 2026, in order to protect consumer purchasing power and food security amidst accelerating inflation.
Romania’s consumer prices rose by 9.76% on the year in October, ticking down from a 9.88% annual increase in September. Last week, BNR decided to keep its monetary policy rate unchanged at 6.5%. It last changed the policy rate in August 2024, cutting it by 25 basis points.