While service sector price pressures appear to be moderating, the trend requires confirmation before the National Bank of Romania (BNR) considers policy changes.
Food inflation came in at 7.75% and services at 11.0%, both slightly lower than expected, while non-food inflation reached 10.5%. Positive surprises included lower prices for vegetables like beans and potatoes, and fuel costs below forecasts. However, eggs, coffee, gas, and airfares drove price increases.
ING economists expect inflation to remain around current levels until summer 2026, when base effects from 2025 tax hikes and electricity market liberalisation will fade. "We continue to expect lower pressures from commodity prices, forecasting some declines in both oil and gas prices in 2026," said Ștefan Posea, ING Economist for Romania. Combined with weakening consumption and cautious consumer behaviour, inflation should cool to 4.5% by year-end.
BNR is expected to maintain its 6.50% policy rate at the 19 January meeting, despite concerns about domestic demand. The investment cycle boosted by recovery plan deadlines should offset some consumption-related demand pressures, while infrastructure developments continue supporting productive capacity.
ING forecasts the central bank will hold rates until May 2026, followed by 100 basis points of cuts by year-end. Two uncertainties remain: gas price liberalisation and removal of margin caps on food items, which could influence the timing of policy changes.
