Inflation rises to over one-year high in June

Latest reading: Inflation came in at 5.7% in June, which was up from May’s 5.5%, marking the highest inflation rate since April 2024 and moving further above the Central Bank's 1.5–3.5% inflation target range. Moreover, June’s reading exceeded market expectations. Looking at the details of the release, the increase was chiefly driven by stronger price pressures for food. Meanwhile, non-food and services inflation remained at May’s level. Annual average inflation edged up to 5.1% in June (May: 5.0%). Finally, consumer prices rose 0.45% over the previous month in June, which was below the 0.46% rise logged in May.

Panelist insight: Commenting on the outlook, ING’s Valentin Tataru stated: “Several inflationary shocks are expected over the summer. Electricity price caps were removed on 1 July, which will push utility bills higher. In August, the standard VAT rate will increase from 19% to 21%, and excise duties on alcohol, fuel, and tobacco will rise under the new fiscal package. While these measures aim to strengthen public finances, they will also trigger a one-off spike in consumer prices. […] From the second half of 2026 onward, we expect meaningful disinflation to take hold, driven by base effects and weakening demand, potentially bringing inflation down to the 4.0% area by the end of 2026.” Similarly, Vlad Ionita, analyst at Erste Bank stated: “Consequently, we have revised our year-end CPI forecast upward […]. Our revised forecast carries upside risks, primarily stemming from our assumption of a 30% electricity price increase next month, which market data suggests may be higher. Furthermore, the assumed 60% pass-through of the VAT hike into consumer prices presents another potential upside risk.”

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