Seemingly good news about inflation in October – but not quite (Graph)

Annual inflation in Bulgaria slowed down in October, according to data from the National Statistical Institute (NSI). The rate of increase in average retail prices fell to 5.3% after reaching 5.6% in September – a two-year record. The level of price increases is now where it was in August.

The slowdown in the consumer price index (CPI) compared to the same month in 2024 seems to be entirely due to the basis of comparison. This conclusion can be drawn because of the sharp rise in monthly inflation in October (compared to September) – by 0.9%.

Economists explain the rise in prices with strong domestic demand, supported by the continuing growth in wages in the country.

As Economic.bg wrote, although this creates expectations for a positive effect on the state budget due to the possibility of higher revenues from value added tax (VAT), high prices carry the already realized risk that our country will cease to meet the Maastricht criterion for price stability – an important condition for joining the eurozone, which must be complied with thereafter. Compliance with this criterion, as well as with the criteria for a specific level of deficit and public debt, aims to ensure that the acceding country has a sustainable economy and stable public finances that will not jeopardize the stability of the eurozone.

Specifically, in order to meet the euro requirements (which was mandatory for technical approval but is highly desirable thereafter), inflation must not exceed the average level of the three member states with the lowest inflation by more than 1.5 percentage points. However, this condition was already violated in September.

Data from the European statistical service Eurostat on the level of inflation in Bulgaria is due to be published this Wednesday, November 19.

What is becoming most expensive

On a monthly basis, the NSI reports an increase in the prices of goods and services in the following consumer groups:

• "Clothing and footwear" – an increase of 7.1%;
• "Recreation and culture" – an increase of 5.5%;
• "Education" – an increase of 1.1%;
• "Alcoholic beverages and tobacco products" – an increase of 0.5%;
• "Food products and non-alcoholic beverages" – an increase of 0.3%;
• "Healthcare" – an increase of 0.2%;
• "Housing, water, electricity, gas, and other fuels" – an increase of 0.2%;
• "Communications" – an increase of 0.1%;
• "Miscellaneous goods and services" – an increase of 0.1%.

Prices are lower in the following groups:

• "Transport" – a decrease of 0.2%;
• "Furniture, household goods and services for the home and for the usual maintenance of the home" – decrease of 0.2%.

No change in the prices of goods and services in the "Restaurants and hotels" group.

Translated with DeepL.