The first package of fiscal measures raised inflation to almost 10%

The increase in the general VAT rate from 19% to 21%, the increase in reduced VAT rates, the increase in excise duties, the increase and introduction of new taxes and fees approved by the first package of fiscal measures assumed by the Bologna government in July were reflected in the inflation rate for August. According to official data published yesterday by the National Institute of Statistics, the annual inflation rate reached 9.9% in August 2025, up from 7.84% in July.

The price increases were felt in all segments: non-food goods increased by 10.48%, services by 9.85%, and food products by 8.92%. The INS shows that the consumer price index in August, compared to July, was 102.10%, while the inflation rate since the beginning of the year rose to 8.1%. Compared to August 2024, the price increase reached 9.9%, and the average rate of change in consumer prices in the last 12 months was 5.7%.

We recall that during August, Mugur Isărescu, the governor of the National Bank of Romania, warned that this evolution was anticipated, emphasizing that external shocks and domestic decisions had amplified the pressure on prices. According to the governor of the NBR, the reliberalization of the energy market from July 1 led to an increase in the inflation rate by 2.2%, the VAT increase meant another 2%, which led to a major impact even on the adjusted CORE 2 inflation.

Mugur Isărescu specified: "Three major shocks that will be absorbed in the coming period if we avoid the side effects, the deterioration of inflationary expectations is not easy after such price increases. This is the forecast. We have a beautiful hump, so to speak, and it is even a little bigger. So, in September, when the peak will probably be, instead of 9, it will probably be around 9.6 - 9.7, the inflation peak, after which a gradual absorption of these shocks will follow. Indeed, in our forecast, at the end of next year, inflation will not only enter the targeted range, but will even be lower than the inflation forecasted in the previous round, in the previous inflation report".

Following the data presented yesterday by the INS, the central bank adjusted its forecast for the end of the year upwards, estimating an inflation of 8.8%, most likely "over 9%", compared to only 4.6% previously anticipated. At the same time, the NBR estimates a gradual moderation of price increases, up to 3% at the end of 2026, below the 3.4% forecast in the previous report.

Regarding the inflation rate for August, Sorin Grindeanu, the interim president of the PSD, said: "When governance is reduced only to cuts, inflationary measures and budgetary constraints, the effects are immediately visible. Inflation has reached a record level of 9.9%. We must stop this roller that destroys people's purchasing power. Romania urgently needs a positive economic project, which would encourage entrepreneurs to invest, increase production and the number of jobs and bring more revenue to the budget.”

Former Prime Minister and former Finance Minister Florin Cîţu claims that the main culprits for the new inflation rate are the Government, but also the NBR.

"The main fault lies with the Government and the governments of the last three years, which increased taxes and the deficit at the same time. It is terrible what happened, but part of the fault lies with the central bank, which was supposed to be the guardian of price stability and work for the interests of Romanians, not for the interests of governments. I am sorry to say it, but part of the fault lies with the NBR, which I do not know whether directly or indirectly wanted to support the campaign to finance the public deficit with lower short-term interest rates, introduced liquidity into the system, which fuels prices. In the end, if the Government does not want to reform, unfortunately, it is the duty of the central bank to protect us from the Government and the 10% inflation shows that it has not done so," said Florin Cîţu.

Social Democrat Adrian Câciu, former finance minister, said: "9.9% in August! Over 10% in September! Sad, but I warned that the stubbornness to increase VAT is blowing up inflation and decreasing purchasing power. But what should the mules understand! They refuse to tax capital. Let the common man pay, they say. I hope I don't need to say who, by name and surname, assumed the VAT increase! Sad! And stupid!”.

From the analysis of the data published yesterday by the INS, we also note that the harmonized index of consumer prices, used for European comparison, shows an annual inflation of 8.5%, placing Romania in a persistent risk zone compared to the European Union average. The analysis by product and service groups reveals the main sources of these increases: food goods advanced by 1.63% compared to the previous month and by almost 9% compared to August 2024, confirming that basic products are pushing inflation up, with majors contributions from bakery, meat, dairy and eggs, while vegetables and fruits experienced negative seasonal corrections. In the non-food area, increases of over 3% for fuels and 2.8% for tobacco and cigarettes show the accumulated impact of market liberalization and fiscal policies, while electricity exploded after the end of the capping scheme, leading to an index of 164.6% compared to December 2024, a shock with knock-on effects on all production costs and related services. Services advanced by 2.9% compared to July, with the strongest impulses coming from transport, hygiene and cosmetics, as well as restaurants and hotels, signaling both cost adjustments and robust demand in the HoReCa sector. From the data on the partial indices, it is observed that, regardless of the elimination of volatile categories such as fuels, energy or seasonal food products, the CPI remains high, which confirms the generalized nature of inflation and the lack of effective shock absorbers. The annual evolution graph shows a continuous acceleration after the spring of 2025, culminating in the summer highs, in a spiral that propagates from both goods and services. All these data show that our country is facing persistent inflation, fueled by energy deregulation, cost pressures in supply chains and a robust domestic demand dynamics, which maintains high pressures on real incomes, competitiveness and macroeconomic stability.

In light of the above and the implementation of the other fiscal measures packages in the coming period, we will see if the NBR scenario of gradual tempering of the inflation rate is confirmed or if the economy will continue to be pushed by new supply shocks and consumers will have to continue to bear unaffordable prices.