Bulgarian inflation expectedly accelerated in January

The National Statistical Institute (NSI) reported an acceleration in the inflation rate in Bulgaria in January. The main contributors to the upward movement were the rising prices of housing, water, electricity, gas and other fuels, as well as food and restaurant services.

Retail prices rose by 3.7% compared to the same month in 2024 and were 2% higher than in December. For comparison, the annual increase in this indicator in the previous month was 2.2%, and the monthly increase was 0.4%.

The higher inflation rate was already predicted by several economists. Since the beginning of the year the country’s restaurant sector has been paying 20% ​​VAT, rather than the reduced rate of 9%. Separately, since January 1, household electricity bills have surged in price by an average of 8.4%.

According to the NSI, the prices of goods and services in the "Housing, water, electricity, gas and other fuels" category increased by 4.6%, while food products and non-alcoholic beverages cost 2.5% more.

In the "Restaurants and Hotels" category, prices are up by 2.2%, and in the "Communications" category, there is an increase of 2.4 percent.

In the food products group, the most significant price increases were recorded for cucumbers (22.5%), peppers (16.8%), bread (15.9%), cabbage (11.6%) and flour (10.9%).

In non-food products, the leaders in price bumps are the personal document issuance fees (19.4%), driven by the new prices of ID cards, household gas supply (13.2%), electricity (8.4%), collection, disposal and treatment of wastewater (5.9%), methane (4.8%), driver licence courses (4.2%), mobile telephone services - by 4.1 percent, among others.

Inflation and the Euro area

The inflation index, which is used to measure Bulgaria's convergence with the eurozone, was 2.6% in January. However, it is only on February 24 that Eurostat will publish the latest data for all European Union countries, which will show whether Bulgaria has already met the inflation criterion for that month, as most economists expect. This will give the Zhelyazkov cabinet a legal basis to request an extraordinary convergence report from the European Commission (EC) and the European Central Bank (ECB).

For the month of December, the inflation index was 2.6% or just 0.1 points above the threshold for admission into the eurozone.

On Friday, former Finance Minister Assen Vassilev stated that Bulgaria already meets the criterion and that the government should request a convergence report.

We see that, even with significantly higher January inflation than in the same period last year, we are fulfilling the criteria, even if no country is excluded (ed. from the control group). The average annual inflation is 2.6%. We are right at the reference value," Vassilev said, quoted by Focus news agency.

Translated by Tzvetozar Vincent Iolov