Bulgaria inflation
(Source: Trading Economics-National Statistical Institute Bulgaria)

Inflation in Bulgaria soars above the EU average

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Bulgaria’s annual inflation rate stood at 6.3% in November, above the European Union (EU) average, according to Eurostat. EU’s annual inflation was 5.2% last month, up from 4.4% in October. A year earlier, the rate was 0.2%, the statistical office of the EU said.

The lowest annual rates were registered in Malta (2.4%), Portugal (2.6%) and France (3.4%). The highest annual rates were recorded in Lithuania (9.3%), Estonia (8.6%) and Hungary (7.5%). Compared with October, annual inflation remained stable in one Member State and rose in twenty-six.

In Eurozone, the annual inflation rate was 4.9% last month, up from 4.1% in October. A year earlier, the rate was -0.3%. The highest contribution to eurozone’s annual inflation rate came from energy (+2.57 percentage points, pp), followed by services (+1.16 pp), non-energy industrial goods (+0.64 pp) and food, alcohol & tobacco (+0.49 pp).

Separate data released by Bulgaria’s National Statistical Institute showed that the annual inflation rate in Bulgaria accelerated to 7.3% in November from 6% in the previous month. It was the highest inflation rate since December of 2008. Upward pressure came from food & noon-alcoholic beverages (7.2%); housing & utilities (10.9%; and transport (22.9%). On a monthly basis, consumer prices increased by 1.4%, after a 1.8% rise in October.

The European Commission said it expects Bulgaria’s consumer price inflation to accelerate to 2.4% in 2021 and 2.9% in 2022 before slowing down to 1.8% in 2023 as the second-round effects of high energy prices are expected to dissipate.

“The impact of higher energy prices on headline inflation and consequently on private consumption may be stronger than expected” the EU’s executive arm said last month.

The Commission also sees Bulgaria’s gross domestic product (GDP) growth increasing to 4.1% in 2022 and remaining strong at 3.5% in 2023.
Bulgaria’s GDP advanced 4.6% year-on-year in the third quarter of 2021, much higher than initial estimates of 0.4% but less than a downwardly revised 7.1% expansion in the previous quarter. Still, it was the second quarter of growth, after over a year of contraction. On a quarterly basis, the Bulgarian economy advanced 0.6%, easing from an upwardly revised 0.8% increase in the second quarter of the year.

FocusEconomics panelists see the Bulgarian economy expanding 3.8% in 2022 and 3.7% in 2023. Lower public spending growth should drive the slowdown, while export growth will ease from 2021’s projected strong rebound.

Bulgaria’s GDP shrank by 4.4% last year.