The updated forecast indicates a slowdown in the annual inflation rate in the first quarter of 2026, followed by a temporary increase in the second quarter, mainly due to base effects associated with price reductions in the second quarter of 2025 recorded for energy products, according to the February edition of the Inflation Report published by the National Bank of Romania.
The updated forecast indicates a slowdown in the annual inflation rate in the first quarter of 2026, followed by a temporary increase in the second quarter, mainly due to certain effects. "The updated forecast indicates a slowdown in the annual inflation rate in the first quarter of 2026, followed by a temporary increase in the second quarter, mainly due to base effects associated with price reductions in the second quarter of 2025 recorded for energy products. Statistical base effects will also be felt in the following quarter, but in the opposite direction and on a much larger scale, driven by higher electricity prices and increases in indirect taxes in July-August 2025. As a result, the annual inflation rate will decline substantially in the third quarter of this year, a development further supported by the persistence and even amplification of the demand deficit in the economy. Over the rest of the projection period, CPI dynamics will gradually slow down, reflecting the persistent disinflationary influences of the fiscal measures already adopted, transmitted through the compression of aggregate demand, as well as the downward adjustment of medium-term inflation expectations, despite a surge in the latter, manifested in the second half of the previous year. Under these conditions, the annual inflation rate is projected at 3.9 percent at the end of 2026 and 2.9 percent at the end of 2027," the report states.
Compared with the values published in the November 2025 Inflation Report, the annual CPI inflation rate has been revised slightly upwards throughout the forecast period, by 0.2 percentage points at the end of this year and by 0.1 percentage points in the third quarter of 2027, the horizon of the previous projection.
According to BNR, the revision reflects higher contributions from the adjusted CORE2 index, natural gas, tobacco products, and administered prices, only partially offset by more favorable prospects for the LFO, electricity, and fuel components.
"Particularly in the medium term, the balance of risks to CPI inflation remains tilted to the upside relative to the baseline scenario. Externally, persistent geopolitical tensions continue to be a considerable source of uncertainty, compounded by the risk of sharp fluctuations in the euro-dollar exchange rate, with the potential to feed through to domestic price dynamics via several channels. Domestically, uncertainties are amplified by the one-year postponement of natural gas market liberalization and concern, in the absence of clear operational information until the completion of the baseline scenario, the configuration of the transition stages and how they will affect price formation and dynamics, both before and after April 1, 2027," the document states.
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