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.
Romania had to remove the price cap system, the most complex and costly in Europe, after a formal notice 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.
As a result, Romania saw 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), 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).
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.
Rising energy costs are set to contribute to a rising inflation. Overall, 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).
Last week, Romania’s central bank announced 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.
(Romania Insider, August 12, 2025)