Inflation jumped by 2.7% in a single month in Romania in July, compared to June 2025, to an annual rate of 7.8%. Although food prices did not increase significantly, the removal of the electricity price cap on July 1 led to an average 61% increase in electricity bills, according to a report from the National Institute of Statistics.\u00a0<\/p>\n
Romania capped gas and electricity prices since the start of the war in Ukraine to ease inflation and accompanying costs. As a result, small consumers paid a fixed rate for the past three years, which, on July 1, 2025, at the time of the cap removal, was three times lower than the European average.\u00a0<\/p>\n
Romania had to remove the price cap system, the most complex and costly in Europe, after a formal notice<\/a> from the European Commission. Aside from the benefit to small consumers, the system tended to keep the prices on the wholesale and retail markets above those expected to emerge from a functioning market mechanism.\u00a0<\/p>\n As a result, Romania saw the third-highest electricity<\/a> spot price in the EU from the beginning of the year to date, EUR 103.53\/MWh (or RON 525 \/MWh), maintaining the position it held last year. The only European countries that reported a higher spot price than Romania in July were Italy (EUR 115\/MWh) and Slovenia (EUR 103.77\/MWh).<\/p>\n The removal of the cap system, however, is set to cause a price shock. According to the National Institute of Statistics, the removal of the electricity price cap on July 1 resulted in an average bill increase of +61.5% compared to June 2025 and +63% compared to July 2024. Gas bills, where prices remain capped until March 2026, also rose by +3% last month, but are still below the level of a year ago.\u00a0<\/p>\n Rising energy costs are set to contribute to a rising inflation.\u00a0Overall, on August 1, before the VAT increase, annual inflation in Romania had reached 7.85%, with an annual increase of +7.6% in food prices and of +8.2% in non-food goods prices (which include energy, gas, and fuels).<\/p>\n Last week, Romania\u2019s central bank announced<\/a> it has maintained the monetary policy rate at 6.5% given the already higher-than-expected inflation in June, but particularly the expected price shock prompted by the electricity price in July, following the market liberalization and the VAT rate hike.\u00a0<\/p>\n