Romania’s real wages slightly up in July amid 12-month standstill

The rise in the minimum statutory wage in July contributed to the modest improvement, but further wage hikes remain uncertain under the current gloomy economic conditions.

Amid lower annual inflation, the moderate nominal rise in the average net wage resulted in a 2.5% y/y real contraction in July, which was still the best reading in twelve months (-4.5% y/y in H2 last year, -5.9% y/y in H1 this year).

In the manufacturing segment, not impacted by the effects of frozen wages in the budgetary sector, the average net wage rose by 7.8% y/y in July and will probably mark a positive real advance in August, when inflation slowed to 6.2% y/y.

Consumer price inflation eased from 10.4% y/y in June to 8.2% y/y in July and further to 6.2% y/y in August – with further disinflation expected to slow down in the coming months. Under these circumstances, real wage growth returning to positive territory is not expected by the end of the year – which will keep private consumption and economic growth under pressure.

In the medium term, the central bank expects lower (3.4%) inflation at the end of 2027, while Erste Research projects 4.3% inflation at the end of next year. On the incomes side, nominal wage hikes in the budgetary sector are possible in January 2027 after a two-year freeze, but the overall sentiment among employers remains largely cautious, with the nominal increase debatably set to exceed headline inflation through 2027.

Under a broader perspective, the real net wage has remained roughly constant over the past year while the months with bonuses (year-end, Easter) marked peaks, and July brought a likely permanent modest increase prompted by the minimum wage hike.

Private consumption, reflected by retail sales, has subsequently decreased and stabilised through the first half of 2026 at a level that was 5%-6% lower compared with the same period of 2025. The size of the negative correction in retail sales largely matched the real decrease in the average net wage.

Real income and private consumption dynamics are expected to improve in 2027, but this still largely depends on the regional economic context.