Inflation increased significantly in July and August 2025, mainly as a result of the liberalization of the electricity market, the increase in the VAT rate and excise duties, says the president of the National Institute of Statistics (INS), Tudorel Andrei, in the article ‘Consumer Price Index, interpretation issues’, published in the monthly newsletter of the INS.
“Inflation is a complex phenomenon, which has a direct and indirect impact on macroeconomic balances and the well-being of the population. Sudden changes in the evolution of inflation have an immediate effect on the behavior of economic agents and the population. Precisely for this reason, inflation is quantified by the national statistical offices at the level of each month, and the results obtained are presented to the public through press releases, as soon as possible after the end of the month for which it is calculated”, claims Tudorel Andrei.
He mentions that the National Institute of Statistics publishes, since November 1990, every month, the consumer price index, overall, for food, non-food products and services, as well as for categories of goods and services representative of population consumption. The Statistical Price Bulletin, published monthly, presents the methodology underlying the calculation of this indicator, according to Agerpres.
According to the president of the INS, for a correct interpretation of the Consumer Price Index, it is necessary to take into account two essential elements: the structure of the consumer basket and the monthly evolution of the prices of goods and services included in it. The consumer basket is updated annually, but without major changes from one year to another, in order to allow the comparability of the indicator over time.
According to him, the CPI measures inflation at the national level and, for this reason, may not exactly reflect the situation of each person or household. The structure of expenses differs from one household to another, depending on the level of income and consumption habits. For example, households with higher incomes generally allocate a lower share to food than those with lower incomes.
In addition, prices are collected based on a sample of localities and commercial units, designed to ensure national representativeness. This does not exclude the existence of local price variations, which may differ from those reflected by the CPI in a given period.
Tudorel Andrei also argues that, in addition to economic factors, the perception of inflation is also influenced by a psychological component. This is determined by factors such as the intensity of public debates or the frequency with which the population is confronted with price increases for current consumer products.
“In July and August of this year, inflation increased significantly, mainly as a result of the liberalization of the electricity market, the increase in the VAT rate and excise duties. These factors determined an acceleration of both monthly and annual inflation. Similar developments were observed in other periods, such as April and May 2022, when rapid price increases accumulated in a short period of time. In 2025, the three factors mentioned influenced the increase in prices both directly and indirectly, through effects that propagated over time on several categories of products and services. In order to more clearly assess these effects, two analysis scenarios were constructed, which simulate the evolution of inflation in the absence of the sharp increases in July and August. The results of these simulations show that, if we exclude the direct impact of the three factors, the evolution of prices in the period July-November 2025 would have been relatively close to that recorded in previously. However, in the case of food products and services, the indirect effects were more pronounced and over a longer period of time”, mentions Tudorel Andrei.
According to him, the increase in inflation to levels above 9%, starting in July, influenced the consumption behavior of the population. This effect was reflected in the reduction in the volume of retail trade in the following months, especially in certain market segments, such as traditional trade, fuels or cultural and recreational goods. At the same time, other areas, such as online sales or IT equipment, continued to register increases.