Inflation in Romania creates big headaches for investors, especially since it is the highest in the EU and the third highest in Europe. Investors are concerned that their investments may be eroded by inflation if it is higher than investment returns.
Inflation erodes investment. Archive photo
The latest inflation figures in Romania reveal persistent price pressures, despite a slight moderation in their growth in October 2025. Our country continues to lead the European Union in terms of consumer price growth, highlighting the structural challenges it faces in the context of a stagnant economy and limited monetary policy flexibility.
Persistent inflation in Romania, a dilemma for the National Bank
The National Bank of Romania decided to keep the interest rate unchanged at 6.5%, citing the possibility that high inflation will persist for a longer period of time. Unfortunately, under these conditions, the central bank cannot do much to stimulate the now struggling economy, with massive public deficits that need to be reduced and consumption that has fallen sharply since the government's austerity measures came into effect.
The annual inflation rate in Romania decreased slightly in October 2025, to 9.8%. This remains at its highest level since June 2023; however, price increases for both food and non-food products moderated compared to September this year. Services prices rose at a slightly faster pace (10.52% vs. 10.36%). On a monthly basis, consumer prices rose 0.5% in October, following a 0.36% rise in September. At the same time, GDP data remained almost unchanged, with an increase of 0.3% compared to the same period last year. This high level of inflation in Romania led the National Bank of Romania to keep the interest rate at a high level of 6.5% for the sixteenth consecutive month, well below inflation and with very little prospect of a decrease in the near future.
Inflation will come down a little and very slowly
The National Bank of Romania mentioned in its press release that annual inflation will decrease slightly in the next three quarters, but will remain higher than previous estimates. This is due to the temporary effects caused by two recent government measures: the removal of the electricity price cap on 1 July and the increase in consumption taxes (VAT and excise duty) from 1 August 2025.
The NBR's November inflation report predicts that it will fall sharply in the third quarter of 2026, once these direct effects are expected to disappear. Thereafter, inflation will continue to fall, but the pace of decline will be slower than previously anticipated, starting from a higher level. Only in 2027 is it estimated that inflation will reach the NBR target. This development will be supported by a drop in demand caused by the new fiscal and budgetary measures introduced in August 2025, which will temper consumption and investment.
“There are also additional uncertainties and political turmoil regarding the steps the authorities will take in the coming period to continue fiscal consolidation, in line with the plan agreed with the European Commission on deficit reduction. The Romanian economy also faces external risks that may influence economic activity and inflation in the medium term. These include global trade tensions, the war in Ukraine and increased defense and infrastructure spending in European Union countries – factors that may change the direction of economic policies and pressures on prices.””, believes eToro analyst Bogdan Maioreanu.
Romania has the highest inflation in the EU
Currently, Romania has the highest inflation in the EU and the third highest in Europe, after Turkey and Ukraine, before Russia, Belarus and Moldova. Looking at countries in the central and eastern part of the European Union, inflation in Bulgaria stands at 5.6% (an increase in September's figure – the most recently published – from 5.3% in August), in October Hungary remains at 4.3%, Slovakia also shows a slight increase to 4.3% from 4.2% in September, and Poland shows a slight decrease to 2.8% from 2.9% a month ago, and the Czech Republic stands at 2.5%, also up slightly from September's 2.3%. All of these numbers are well below our record inflation. Eurozone consumer price inflation slowed to 2.1% from 2.2% in September 2025, slightly above May's low of 1.9%. In the EU, the only country with deflation is Cyprus, which recorded annual inflation of -0.3% in October 2025.
Inflation is also a real concern for individual investors in Romania, as it was ranked as the number one external risk for their portfolios, according to the latest eToro Retail Investor Beat survey. It is closely followed by a potential recession of the Romanian economy.
Romania faces a difficult balance between curbing price increases and supporting economic activity. This should give politicians across the political spectrum enough cause for concern to finally start implementing the reforms the country desperately needs.
