Romania’s Economic Snapshot: Inflation, Wages, and Employment

In February 2025, Romania’s Consumer Price Index (CPI) rose by 5.0% YoY, with an increase of 0.9 % MoM. Meanwhile, average net earnings in January 2025 grew by 9.7% compared to the same period last year, despite registering a 5.6 p.p. decline from December 2024. On the employment front, the unemployment rate stood at 5.9% in Q4 2024, marking a 0.3 p.p. rise compared to Q3 2024.

Inflation

As of February 2025, Romania’s Consumer Price Index (CPI) recorded a 5.0% YoY increase, reflecting a notable uptick compared to February 2024. On a monthly basis, consumer prices rose by 0.88% versus January 2025, taking the year-to-date inflation rate to 1.8%.

Delving into the components of CPI, services posted the highest annual increase at 6.4%, driven mainly by hygiene and cosmetic products (12.9%). Food goods and non-food goods followed with growth rates of 4.5% and 4.8%, respectively. Within food goods, fruit and tinned fruit led the gains at 8.3%, while tobacco and cigarettes stood out in non-food goods with an 8.1% rise.

Romanian CPI YoY (Feb 2020- Feb 2025)

Source: Romanian Institute of Statistics, InterCapital Research

It is also important to consider the budget deficit, which reached around 8.6% of GDP last year—amounting to roughly EUR 30bn—largely due to heightened electoral spending, pension and wage increases, and infrastructure investments. This sizeable deficit casts doubt on the feasibility of extending energy price caps and adds further economic uncertainty. Romania aims to reduce the deficit to roughly 7% of GDP in 2025, a goal deemed “challenging” by the government, which is planned to be achieved by streamlining public administration.

Turning to the Harmonized Index of Consumer Prices (HICP), used for cross-country comparisons within the EU, Romania posted a 0.7% monthly increase and an annual rate of 5.2% in February 2025. This level remains above many Euro area countries, underscoring Romania’s ongoing challenge with elevated inflation, particularly amid continued cost pressures in services and energy.

Wages

In January 2025, the average gross earning in Romania stood at RON 8,910, which represents EUR 1,788 and indicates a 3.7 p.p. downside from December 2024. Similarly, the average net earnings were RON 5,328, which represents EUR 1,069 and implies a downside of -5.6 p.p. compared to December 2024. On the other hand, as compared to January of the previous year, the average net earnings increased by 9.7%.

In January 2025, in the majority of activities belonging to the economic sector, the level of the average net earnings decreased as compared to December 2024 due to the granting of occasional bonuses, payments in kind and other allowances, and amounts from the net profit and from other funds. Furthermore, certain tax incentives that had previously boosted net pay expired, resulting in higher taxes and reduced take-home earnings. Seasonal factors, such as lower production or revenue after the holidays, also contributed to the decrease, as did the hiring of new staff on lower pay scales. The increases of the average net earnings, in some of the activities, as compared to the previous month were due to the application of legal provisions, which established a higher minimum gross basic salary at the national level, thereby pushing up wages for employees who were previously earning below the new threshold. In addition, some employers granted occasional bonuses, payments in kind, and other allowances, which further contributed to higher net earnings in these activities.

Monthly net average earnings Romania (Feb 2020 – Feb 2025)

Source: Romanian Institute of Statistics, InterCapital Research

The highest values of the average net earnings were recorded in computer programming, consultancy and related activities including information service activities (EUR 2,295) and in manufacture of coke and refined petroleum products (EUR 2,183), while the lowest in manufacture of wearing apparel (EUR 660) and in accommodation and food service activities (EUR 666).

In the budgetary sector, the average net earnings recorded small gains compared to the previous month in human health and social work activities (+1.5%), as well as in education (+0.6%). By contrast, public administration saw a slight decrease of 0.8%.

Data on earnings, correlated alongside CPI, shows that in January 2025, the purchasing power of earnings was 4.5% higher than in the same month of the previous year. However, compared with December 2024, real earnings declined by 6.5%.

Employment

In Q4 2024, Romania’s unemployment rate stood at 5.9%, up by 0.3 p.p. compared to Q3 2024. This corresponds to roughly 478.5k unemployed individuals out of an active population of about 8.171m, reflecting an overall coverage of around 59%. Better look on that matter we can see through the employment rate for the population aged 25-54 which dropped by 0.6 p.p. QoQ to 77.5%, while older age groups saw modest gains: the 55-64 bracket rose by 0.3 p.p. QoQ to 55.5%, and the 65+ group by 0.1 p.p. QoQ to 2.1%.

By contrast, the youth employment rate (15-24) declined by 0.9 p.p. QoQ to 18.7%, underscoring Romania’s ongoing struggle with high youth unemployment. This segment’s jobless rate reached 25.9%, placing significant upward pressure on the country’s overall unemployment rate.

Total unemployment rate (Jan 2018 – Jan 2025, %)

Source: Romanian Institute of Statistics, InterCapital Research

For the month of January, the unemployment rate stood at 5.5%, a decrease of 0.2 p.p. MoM. When compared to the rest of the EU, Romania’s unemployment rate remains below the EU average of 5.8%, being above both Croatia (4.5%) and Slovenia (3.3%). The highest unemployment rates in January 2024 were recorded in Spain (10.4%), Sweden (9.7%), and Finland (8.9%). On the other hand, the lowest unemployment rates were observed in Poland and Czechia, both standing at 2.6%.

Romania continues to grapple with elevated inflation, driven primarily by higher service costs and a sizable public deficit. Wages have shown solid annual growth, even though they dipped from the previous month due to factors like expiring tax incentives, seasonal influences, and newly hired lower-paid staff. While the overall jobless rate remains below the regional average, persistently high youth unemployment signals deeper structural issues. Elevated government spending and uncertainty around energy price caps compound these challenges. Moving forward, balancing price stability, sustaining wage growth, and tackling labor market imbalances will be critical to Romania’s economic resilience.

Damian Bhaskar
Published
Category : Flash News

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