Romania continues to grapple with inflationary pressures, as the annual inflation rate edged up to 5.02% in February 2025, compared to 4.95% in January, exceeding market expectations of 4.75%, according to data published by the National Institute of Statistics (INS) on Thursday.
Despite recent monetary measures, inflation remains significantly above the National Bank of Romania’s (BNR) target range of 1.5% to 3.5%. In response to persistent price pressures, the central bank has revised its year-end inflation forecast for 2025 to 3.8%, signaling an anticipated decline in inflationary momentum in the latter part of the year.
Price Trends Across Sectors
- Non-food products saw a price increase of 4.79% in February, up from 4.60% in January.
- Food prices remained stable at 4.54%.
- Services inflation eased slightly to 6.42%, down from 6.54%.
- On a monthly basis, consumer prices rose by 0.88%, following a 0.92% increase in January.
Romania’s Inflation in the EU Context
Romania continues to record one of the highest inflation rates in the European Union.
In December 2024, the EU’s annual inflation rate stood at 2.7%, with Romania leading the bloc at 5.5%, marking the tenth consecutive month of having the highest inflation.
By January 2025, EU-wide inflation increased slightly to 2.8%, with the highest annual rates recorded in:
- Hungary (5.7%)
- Romania (5.3%)
- Croatia (5.0%)
Macroeconomic Risks and Challenges
According to Austrian banking giant Erste Group, inflation remains persistent despite easing from its peak, complicating the BNR’s efforts to balance economic support with price stability. The uncertain political landscape, upcoming elections, and fragmented policymaking further increase concerns about fiscal discipline and reform implementation. The report highlights that while strong domestic demand provides resilience, macroeconomic vulnerabilities and political uncertainty could dampen investor confidence and long-term stability.
Economic Growth Outlook
Analysts from the Romanian Economic Monitor (RoEM), a research initiative of the Faculty of Economics and Business Administration (FSEGA) at Babeș-Bolyai University (UBB) in Cluj-Napoca, project Romania’s GDP to grow by 1.5% in 2025, up from 0.9% in 2024. However, this remains well below the country’s potential growth rate of 3-4% annually.
The latest provisional data from INS shows that Romania’s GDP growth in 2024 was only 0.9%, aligning closely with RoEM’s final forecast of 1% but falling short of earlier estimates of 3% and later 1.8%. Economic recovery remains fragile, with risks posed by global geopolitical tensions and the sluggish recovery of the Eurozone economy.
Structural Economic Concerns
A persistent structural issue for Romania’s economy is its chronic trade balance deficit, which reached €30 billion in the first ten months of 2024. According to Iuliu Stocklosa, president of the Bucharest Chamber of Commerce and Industry (CCIB), this deficit cannot be offset by the surplus in the service trade balance, posing long-term risks to economic stability.
Policy Challenges Ahead
The rise in inflation underscores the broader economic pressures Romania faces. As the country heads toward crucial elections, policymakers will need to strike a delicate balance between controlling inflation and sustaining economic growth. Without decisive action, persistent inflation and economic uncertainty could erode investor confidence and further strain household budgets.
