Deflation returned to Bulgaria in September (graph)

Deflation has made a comeback to Bulgaria, driven mainly by a drop in food prices. National statistics data shows that in September, on a monthly basis, the Consumer Price Index (CPI) fell by 0.1% – the third such below-zero dip this year. The cooling of prices had started already in August, after having accelerated upwards by nearly 1% in July.

Annual inflation is still relatively high, but it is also decelerating – in line with the expectations of national and international institutions. This decline is due to relatively cheaper energy resources and the high base reached last year. In September, compared to the same month of 2022, prices were up 6.3% - the lowest inflation rate since November 2021.

According to the Bulgarian National Statistical Institute (NSI) data, basic food products were cheaper in September compared to August. This included bread, fish, milk and dairy products. On the other hand, fruits and vegetables went up in price.

The cost of fuel gases in September was also up as a result of the increase in the price of natural gas during that month. The most significant increase, however, was in liquid fuel prices - 5%. The specialized website Fuelo shows that, both A95 gasoline and diesel went up by about BGN 0.1 per liter (0.05 euros), in the month of September alone.

Air fares went down by 7.6%, as expected after the end of the high tourist season. The price of holiday package tours shrank by about one-fifth, and so did the price of hotel rooms and services in September.

As for the annual inflation rate in Bulgaria, which remains high compared to the rest of Europe, the drivers continue to be the main food products - meat, vegetables, milk and dairy products. The country’s government has only a few months at its disposal to bring inflation closer to EU levels, if it wants to meet its deadline for joining the eurozone – 1 January 2025.

Inflation rate in Bulgaria nevertheless remains in the top 10 in the bloc because of a significant consumer price reductions in the other member states.

In September, Bulgarian consumer prices have experienced a deflation for the third time this year. Nevertheless, the prices of fuels in the country have grown.