Inflation in Romania

A short history of inflation in Romania

Transition Inflation (1990 to 1997)

Romanian inflation peaked at 177.1% in the year to April 1997. It was the delayed cost of the transition from central planning: prices that the communist state had fixed were released in stages after 1990, loss-making state enterprises were kept alive with credit from the central bank, and the leu fell steadily. The government elected in 1996 removed most of the remaining controls at once in early 1997, which produced the spike.

The Long Descent (1997 to 2007)

Inflation came down slowly over the following decade rather than in one stabilisation, helped by the discipline of preparing to join the European Union, which Romania did in 2007. The leu was redenominated at ten thousand to one on 1 July 2005, removing four zeros that fifteen years of inflation had added.

Post-Covid Inflation (2021 to 2023)

In Romania, prices rose fastest in November 2022, at 14.6%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.