The rise in Romania's annual inflation rate to 9.87% in March, driven mainly by higher fuel prices, is contributing to weaker consumption and slowing economic activity, amid a contraction in retail trade, according to the Concordia Employers Confederation.
"Recent data confirm a shift in the dynamics of Romania's economy. After several months of moderation, annual inflation returned to an upward trend in March, reaching 9.87%, up from 9.31% in February, amid rising fuel prices and a volatile external environment. This development follows a year in 2025 when significant adjustments, both in energy prices and fiscal policy, contributed substantially to the current level of inflation. Under these conditions, price pressures are likely to remain elevated in the short term, even if there are prospects for moderation in the second half of the year," Concordia representatives said in a press release.
According to the organisation, the summer of last year brought significant price increases, and when 2026 levels are compared with that already high base, the annual inflation rate will naturally decline, even without actual price reductions.
"The increase in inflation is becoming increasingly visible in the economy through the erosion of purchasing power and declining consumer confidence. Retail data indicate a continued contraction since the second half of last year, with annual retail sales falling to -6.2% in February 2026, and even sharper declines in non-food goods (-9.4%), a segment that closely reflects uncertainty and the pressure felt by households," the analysis adds.
This trend represents a natural adjustment in consumption behaviour, as households prioritise essential spending and cut back on discretionary purchases, the source notes.
"In an economy where private consumption has been the main engine of growth in recent years, such a shift has direct and immediate effects on economic activity. The likelihood that the first two quarters of 2026 will record negative real GDP growth is high," the organisation said.
Beyond the impact on consumption, the business environment is also undergoing a broader adjustment, the document notes.
Rising energy and raw material costs are being compounded by persistently high financing costs, while pressure from the state on domestic financial markets has limited private sector access to cheaper funding.
As a result, some companies are being forced to absorb cost pressures, with visible effects on investment plans and liquidity management.
"These developments are typical of periods of high inflation combined with external uncertainty and indicate an economy undergoing recalibration rather than structural crisis. There are prospects for recovery, but these are conditional. In the short term, the data temper any optimism. Recovery will depend fundamentally on three factors: stabilisation of inflation, restoration of consumer and business confidence, and maintaining a predictable macroeconomic framework," the release added.
In the absence of major new external shocks, it is reasonable to expect inflation to enter a downward trajectory in the second half of the year, creating conditions for a gradual recovery in consumption and, consequently, economic growth.
"However, this recovery will not be immediate. Rebuilding confidence is a long-term process that cannot be accelerated through statements, but only through consistent and concrete actions," Concordia representatives stressed.
In this context, several priorities remain essential, including predictability and stability.
"Companies and households need a clear outlook. Prolonged uncertainty regarding the fiscal and regulatory framework increases reluctance towards consumption and investment and must be addressed through clear and committed decisions," the document notes.
Improving the efficiency of public spending is also key, as reducing state pressure on domestic financial markets would directly lower financing costs for the private sector and free up resources for the real economy.
"Supporting SMEs and attracting investment are crucial, as these segments have the greatest potential to absorb labour and generate added value quickly during recovery periods," the press release added.
At the same time, the relationship between inflation and consumption is becoming increasingly evident in Romania's economic data.
"After a period of growth driven by domestic demand, the economy is going through an adjustment phase, inevitable in the current context but not irreversible. The speed and quality of the recovery will depend on how public and private decision-makers manage to create the conditions for resuming growth in a sustainable way," the organisation concluded.
The Concordia Employers Confederation represents 20 of the most important sectors of the Romanian economy and is a nationally representative social dialogue partner.
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