Romania’s Annual Inflation Rate Increases to 5.02% in February

Romania’s consumer price inflation rose to 5.02% year over year in February, an increase from the 4.95% recorded in January. This uptick was unexpected, surpassing the median forecast of 4.75% by analysts polled by Reuters. The inflation rate is significantly above the National Bank of Romania’s target range of 1.5% to 3.5%.

Key Factors Contributing to Inflation

1. Energy Prices: The surge in energy costs, particularly natural gas, which increased by 9.0% month-over-month, played a significant role in driving inflation higher. Heating prices also rose by 2.1%.
2. Food and Non-Food Prices: While food inflation remained steady at 4.54%, non-food prices increased to 4.79% from 4.60% in January. Margarine prices saw a notable increase of over 17% in February.
3. Services Inflation: Services inflation eased slightly to 6.42% from 6.54% in January.

Consumer prices rose by 0.88% in February compared to the previous month, following a 0.92% increase in January. This monthly rise reflects ongoing price pressures across various sectors.

The unexpected increase in inflation may prompt the National Bank of Romania to maintain a cautious stance on monetary easing. Political risks, especially with presidential elections approaching in May, could further influence the central bank’s decisions. The bank has recently adjusted its inflation forecast for the end of 2025 to 3.8%, indicating a potential downward trend in inflation later in the year.

Economic Context

Romania’s economic growth is expected to be moderate, supported by public investment and EU fund absorption. However, high inflation and persistent economic risks, including political uncertainties and potential credit rating downgrades, pose challenges for the country. Despite these challenges, analysts believe the current economic situation is manageable if appropriate fiscal measures are implemented.

In summary, Romania’s inflation increase in February reflects broader economic pressures, including energy price surges and political uncertainties. As the country approaches key elections, managing inflation while supporting economic growth will be a significant challenge for policymakers.