Soaring electricity prices in Romania, unchecked, reached a 61% increase in July, driving inflation upward
Electricity Price Cap Removal in Romania Causes Sharp Increase in Bills and Inflation
In a move that has significantly impacted households in Romania, the removal of the electricity price cap on July 1, 2025, resulted in a sharp increase in electricity bills for small consumers. According to data, the average bill increased by approximately 61.5% compared to June 2025 and 63% compared to July 2024 [3].
This price shock contributed significantly to a rise in inflation, pushing Romania’s annual inflation rate up to around 7.84% in July 2025 from 5.7% in June, with further increases expected in the third quarter due partly to this removal as well as hikes in VAT and excise duties [1][3][5].
For the past three years, small consumers in Romania had been paying a fixed rate, which was three times lower than the European average. The electricity price cap had kept rates artificially low, but lifting this cap exposed consumers to market prices, causing a marked jump in household energy costs [3]. Gas prices, although capped until March 2026, also showed moderate increases [3].
The National Bank of Romania (BNR) has identified this surge in energy costs as a major transitory inflationary shock. The bank noted that the inflation spike will remain elevated in Q3 2025 but is expected to decline significantly by Q3 2026 once the direct effects of the price cap removal and related fiscal changes fade [1][5].
The electricity price cap system had a tendency to keep prices on the wholesale and retail markets above those expected to emerge from a functioning market mechanism [9]. The removal of the cap system is set to cause a price shock in Romania, as predicted by the BNR [7].
Romania's central bank has maintained the monetary policy rate at 6.5% in response to the higher-than-expected inflation and the expected price shock [2][4]. Despite the recent increase, the price of gas bills in Romania is still below the level of a year ago [6].
It is important to note that Romania has seen the third-highest electricity spot price in the EU from the beginning of the year to date, EUR 103.53/MWh (or RON 525 /MWh) [8]. Last year, Romania held the position of the third-highest electricity spot price in the EU as well [8].
In July 2025, inflation in Romania increased by 2.7% to an annual rate of 7.8% [4]. The annual inflation rate in Romania includes a +8.2% increase in non-food goods prices, which include energy, gas, and fuels [1]. Italy and Slovenia reported higher spot prices for electricity than Romania in July 2025 [1].
The price cap removal in Romania may have contributed to the increase in electricity bills in July 2025 [3]. Romania capped gas and electricity prices since the start of the war in Ukraine to ease inflation [10]. However, the formal notice from the European Commission necessitated the removal of the cap system [1].
In conclusion, the removal of the electricity price cap in Romania has led to a significant increase in electricity bills for small consumers and amplified inflationary pressures, especially in energy and transport-related sectors. The inflation spike is expected to decline significantly by Q3 2026, but the direct effects of the price cap removal and related fiscal changes will continue to impact the economy in the short term.
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