Inflation is falling only on paper, but Romanians are still facing sky-high prices on store shelves. It is one of people’s biggest frustrations: they hear on television that inflation is easing, the pace of price increases is slowing, or the economy is showing signs of stabilising—but when they get to the shop, the receipt tells a very different story.
Bread, milk, meat, eggs, vegetables, fuel, utility bills, rents and loan payments all seem to have remained at difficult-to-bear levels. For many families, the news that “inflation is falling” brings no real relief. The shopping basket is becoming ever more expensive, wages seem unable to keep up, and money runs out faster from one month to the next.
The explanation is simple but painful: falling inflation does not automatically mean falling prices. Most often, it simply means prices are rising more slowly than before. In other words, if products became much more expensive in the past and are now increasing in price by less, inflation may be lower, but prices remain high.
What exactly is inflation?
Inflation is the general increase in prices in an economy over a given period. It does not measure only how much a single product has become more expensive; it tracks changes in a broader basket of goods and services consumed by the population.
In Romania, inflation is calculated by the National Institute of Statistics using the consumer price index. This index tracks price changes for food, non-food goods and services. When annual inflation is said to be close to 10%, this means that, on average, prices are nearly 10% higher than in the same period of the previous year.
According to data published by the National Institute of Statistics, the annual inflation rate in March 2026, compared with March 2025, was 9.9%. This means prices did not fall; they continued to be higher than a year earlier.
Why do economists say inflation is falling when people still see prices rising?
Economists look at the rate at which prices are rising, not only at their absolute level. This is where the confusion arises. If prices rose sharply last year but rise less this year, statistics can show that inflation is falling. But for someone doing the grocery shopping, products are still expensive.
For example, if a product cost 10 lei and rose to 12 lei, the increase was 20%. If the same product reaches 12.60 lei the following year, the increase is 5%. Inflation has fallen from 20% to 5%, but the product has not become cheaper. On the contrary, it is more expensive than before.
This is the crucial difference: lower inflation does not mean lower prices, but slower price increases.
A simple example: how inflation can fall while life remains expensive
Suppose a shopping basket cost 100 lei two years ago. After one year, the same basket reaches 120 lei. That is a 20% increase. In the following year, the basket reaches 126 lei. That is a 5% increase.
Statistically, inflation has fallen from 20% to 5%. But for the shopper, the basket has not returned to 100 lei. It costs 126 lei. This is precisely what Romanians feel in everyday life: inflation may look better in reports, but prices remain high in shops.
Romania remains among the European countries with the steepest price increases
The problem is all the more pressing because Romania continues to have high inflation compared with other European states. According to Eurostat, Romania had the European Union’s highest annual inflation rate in March 2026, calculated using the Harmonised Index of Consumer Prices: 9.0%.
This gap is felt directly in people’s pockets. When prices rise faster than income, purchasing power falls. Romanians may earn more money on paper, but if food, utility bills, services and loan payments rise faster, their standard of living deteriorates.
Why do products not become cheaper once inflation starts to fall?
There are several reasons why prices do not quickly return to previous levels. First, companies face higher costs than in the past. Energy, fuel, transport, wages, rents, taxes and raw materials have become more expensive. Even if some of these costs are no longer rising as quickly, they remain high.
Second, prices are downwardly rigid. In the economy, many prices rise easily but fall with difficulty. Shops, producers and suppliers do not immediately cut prices just because overall inflation is declining. Companies often prefer to rebuild margins damaged during periods of crisis or cover earlier losses.
Third, there is uncertainty. If companies expect energy, taxes, wages or the exchange rate to rise again, they will be cautious and will not quickly reduce prices. In an unstable economy, prices tend to remain high for longer.
Energy is one of the most important reasons prices remain high. Large energy bills affect not only households but also the companies that produce, transport and sell food, clothing, construction materials and services. When energy is expensive, the cost is reflected in almost everything people buy. Romania has become one of the European countries with high energy prices, and this reality weighs directly on household budgets and business costs. We explained the causes in detail in our article on why Romania has reached fourth place in Europe for energy prices.
The difference between disinflation and deflation
To understand the phenomenon properly, it is necessary to distinguish between disinflation and deflation. Disinflation means a decline in the rate at which prices are rising. In other words, prices continue to rise, but more slowly than before.
Deflation, by contrast, means a generalised decline in prices. Only then can we say that, on average, products and services are becoming cheaper. Deflation is rare, however, and can signal serious economic problems, such as falling consumption, stalled investment or reduced economic activity.
Romania is not in a period of deflation. What is most often discussed is a possible easing of inflation—that is, a slowdown in price increases. For people, the difference is enormous: prices are not falling; they are simply no longer rising as quickly.
Why do Romanians feel inflation more strongly than the official average suggests?
Official inflation is an average. But every family has its own “consumption basket”. A family with children, loan payments, a car and large energy bills will experience price increases differently from a person living alone, without a loan and consuming less.
People notice most of all the prices of products they buy frequently: bread, milk, eggs, meat, vegetables, fuel, medicines, bills and transport. If these products rise in price faster than the average, consumers feel that the real inflation in their lives is higher than the officially reported figure.
There is also the memory of prices. People do not compare today’s prices only with those of the previous month, but also with those of two, three or four years ago. If a product that cost 5 lei has reached 8 lei, the fact that it rose by only a few bani in the past month does not change the overall perception: the product is far more expensive than it was before.
For more information about the National Institute of Statistics, see also Inflation reaches 10.7%: why Romanians are paying more even though wages are not keeping up, which provides complementary details on this topic.
What role do wages play in this equation?
For living standards, not only prices but also income matters. If wages rise faster than prices, people may feel an improvement in purchasing power. If wages rise more slowly than prices, people feel they are becoming poorer, even if they receive a pay rise.
For example, if prices rise by 10% and a salary rises by 5%, nominal income is higher, but real purchasing power declines. In practice, the person earns more money on paper but can buy fewer things than before.
This is why many Romanians say that “the money no longer stretches far enough”, even if wages or pensions have been increased. In periods of high inflation, income increases can quickly be absorbed by rising prices.
How does inflation affect loan payments and borrowing?
High inflation also influences the National Bank’s policy. When inflation is high, the central bank is more cautious about cutting interest rates. High interest rates are intended to curb consumption and lending, but for people with loan payments they mean higher costs or a slower decline in instalments.
In April 2026, the National Bank of Romania kept its monetary policy interest rate at 6.50% per year. This decision shows that the central bank still sees inflationary risks and cannot rapidly loosen monetary policy. For Romanians with loans, this means cheaper borrowing may be delayed.
Inflation is also strongly visible in the housing market. When construction materials, energy, labour and interest rates are more expensive, housing becomes less accessible. For many Romanians, the issue is no longer just the price of food or utility bills, but also the cost of rent or a monthly loan payment. This is why the price crisis must be viewed alongside pressure in the housing market. More details are presented in the analysis of Romania’s housing crisis and a comparison with prices in major capitals.
Why do some prices rise faster than others?
Not all prices move in the same way. Food can be affected by weather, agricultural output, imports, energy and transport costs. Fuel depends on international oil quotations, the exchange rate and taxes. Services depend heavily on wages, rents and administrative costs.
That is why, even if overall inflation declines, certain categories may continue to become more expensive. A common example is the services sector, where prices tend to remain high when wages, rents and operating costs increase.
For consumers, this creates a divide between statistics and real life. In reports, inflation may appear to be stabilising. In reality, if the very products bought most often are becoming more expensive, people feel the pressure is greater than official figures suggest.
When might prices actually fall?
Prices may fall in certain sectors if clear conditions emerge: cheaper energy, good harvests, lower transport costs, greater competition between retailers or falling demand. However, a generalised decline in all prices is far less likely than a simple slowdown in price increases.
The most realistic scenario for consumers is not for all prices to return to levels seen several years ago, but for them to rise more slowly while incomes gradually make up for the loss in purchasing power.
In other words, real relief will come not only from lower inflation, but from a combination of more stable prices, better wages, lower interest rates and more manageable costs for energy, housing and services.
What can Romanians do during a period of high prices?
During a period of high inflation, the most important measure is controlling the personal budget. People need to monitor recurring spending more carefully: subscriptions, bills, loan payments, impulse purchases, products bought without comparing prices and small payments which, added up each month, become significant sums.
A useful strategy is to compare prices between shops, buy basic products when they are on offer, avoid food waste and plan meals. It is also important to avoid expensive borrowing for current consumption, especially if monthly income is already under pressure from bills and loan payments.
For families with fixed incomes, every price increase is felt more strongly. That is why budgeting becomes essential. It does not solve the inflation problem, but it can reduce losses and help avoid unnecessary debt. For those seeking practical methods, we have also prepared a separate guide with 21 ways to save money wisely.
Why do people feel they are working more and getting less?
In periods of high inflation, an oppressive feeling emerges: people work the same amount or even more, but their money seems to be worth less. This feeling is not merely psychological. It is the effect of lost purchasing power.
If several years ago a family could cover food, bills, fuel, a loan payment and a few personal expenses with a given income, that same income may no longer be enough today. Even a pay rise can seem useless if it is immediately swallowed up by price increases.
This is the brutal side of inflation: it does not affect only prices, but also people’s confidence. It makes them postpone plans, cut spending, give up holidays, buy less and pay closer attention to every leu.
Inflation may fall, but life remains expensive
When we hear that inflation is falling, we need to understand exactly what this means. It does not mean prices automatically return to previous levels. Most often, it means prices are rising more slowly.
For Romanians, the difference is enormous. Statistically, inflation may show an improvement. In practical terms, the shopping basket, bills, fuel, services, rents and loan payments may remain difficult to bear.
This is why inflation should not be viewed in isolation. It is connected to energy prices, housing costs, loan payments, wages and the way each family manages its money. When all these pressures build up, people feel that life is becoming harder even during periods when statistics show inflation “easing”.
Real improvement will be felt only when incomes rise faster than prices and monthly price increases become small enough for family budgets to breathe again.
Until then, the most accurate way of putting it is this: inflation may fall, but prices do not necessarily fall; they merely rise more slowly. And for millions of Romanians, this means life remains expensive even if the figures appear to improve.
Frequently asked questions about inflation and prices
If inflation falls, why do products not become cheaper?
Because falling inflation usually means prices are rising more slowly, not that they are falling. Genuine price reductions require deflation or specific cost reductions in certain sectors.
What does 9% inflation mean?
It means that, on average, prices are around 9% higher than in the same period of the previous year. Not all products become more expensive at the same rate, and some may record increases above or below the average.
What is disinflation?
Disinflation is a decline in the rate at which prices are rising. Prices continue to rise, but more slowly than before.
What is deflation?
Deflation means a generalised decline in prices. It differs from disinflation and may signal falling demand or deeper economic problems.
Why do people feel inflation is higher than the official rate?
Because every family consumes differently. If a household spends heavily on food, energy, fuel and loan payments, it may feel price increases more strongly than the official average suggests.
When will prices fall in Romania?
Prices may fall in specific areas, but a generalised decline is rarer. Romanians are most likely to feel a real improvement when incomes rise faster than prices and energy, loan and service costs stabilise.
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