According to the latest Romanian inflation print, in January 2026, the inflation in the country continued to run hot, with the CPI recording an increase of 0.9% MoM, and 9.6% YoY during the month. The growth in inflation has been broad-based, with both goods and services recording increases.
The Romanian inflation rate has been, and remains elevated above most of the EU countries for the last several years, driven by first supply chain disruptions and heavy-money printing following COVID-19, and then the energy price growth following the start of the war in Ukraine.
The latest CPI print does tell us that this is still an ongoing trend, with the CPI in January 2026 growing by 0.9% MoM, and 9.6% YoY. Although this marks a slight deceleration from December 2025’s 9.7% annual growth, it marks a clear acceleration compared to the 0.2% MoM increase recorded in December. The slight decrease in the annual growth is largely due to base effects, as the strong price increases in mid 2025 enter into the comparison period.
Romanian CPI YoY growth rate (January 2019 – January 2026, %)
Source: Romanian National Institute of Statistics, InterCapital Research
Across the main categories, prices have grown broadly. Food goods increased by 7.9% YoY and 0.9% MoM, non-food goods grew by 10% YoY and 0.5% MoM, while the services recorded the strongest growth, rising by 11.6% YoY and 1.6% MoM. This spread of inflation across categories shows us that inflation has become generalized across the consumption basket, rather than being limited to several volatile categories.
In particular, the increase in the services inflation now represents the main source of inflationary momentum. Unlike energy-driven shocks, services inflation tends to reflect domestic cost structures more strongly, especially things such as wage growth and inflation expectations, making it more “persistent” in nature.
The country’s persistently elevated inflation is driven by a combination of fiscal policy measures and structural factors. For the fiscal policy, the country has increased taxes and implemented austerity measures to reduce the budget deficit, exceeding 9% of GDP (the highest in the EU). Out of all the tax hikes, the standard VAT tax rate has been increased to 21%, with a single reduced rate of 11% for basic foods and medicines. The Government also increased excise duties on alcohol, tobacco, and fuel.
At the same time, the Government has removed the price caps on electricity prices for households (in July 2025), while the removal of the natural gas price cap, scheduled for March 2026, is expected to slow the disinflation process even further. While this was necessary to stem the widening budget and avoid even larger fiscal issues down the line, it does have a short-term inflationary nature.
For the structural context, the country’s fiscal challenges stem from a consumption-led growth model that relied heavily on the expansionary fiscal policies, including substantial public sector wage and pension increases. Strong wage growth, combined with the labor market tightness in several service sectors, has also likely contributed to the elevated services inflation. In other words, higher wages tend to feed into higher service prices, and unlike energy prices which can deflate significantly if the raw input prices do as well, this is unlikely in any sector where services are included, as the only “deflationary” effect that could come here would be either from lower wages, which most employees won’t accept, or lower service prices, which most companies won’t accept.
For the food prices, here we can see a combination of both seasonal and structural influences, with January seeing a higher number, partly due to seasonal factors, including higher demand around Orthodox holidays. However, global commodity prices also played a role, with coffee prices up more than 25% YoY, the increase across many categories is at the single to double-digit level, while several food items did record price decreases, with the most notable drop in potatoes at -10.8% YoY.
Lastly, in the non-food goods, growth has been recorded across all categories, most of them ranging above 5% YoY, with the largest growth in electric energy prices, which grew by 59% YoY. For this increase, the removal of the price cap played as significant a role as the price growth itself, if not more significant.
Overall, the inflation in the country remains the highest in the EU, initially driven by external shocks and energy price adjustments, while now it exhibits characteristics of domestically-embedded inflation. The strong growth in services’ prices, the broad-based nature of price increases, and the ongoing fiscal and energy policy adjustments suggest that inflation is likely to remain elevated compared to the rest of Europe in the coming period. As such, any disinflation might be more gradual than sudden, particularly if the wage growth continues and the structural, fiscal challenges pose a problem.