In July, inflation in Bulgaria decreased to 2.4% on an annual basis, according to recent statistics from the NSI. However, compared to the previous month, the inflation index rose by 0.8%, reversing a trend of decline observed in recent months. This increase is primarily attributed to higher prices for tourist services and establishments. Seasonal factors contribute to this rise, but year-round, the main drivers of inflation remain the costs associated with restaurants, hotels, transport and general services.
Looking ahead, inflation is expected to continue its deceleration in the second and third quarters of 2024. Nonetheless, strong consumer demand and rising labor costs are anticipated to maintain upward pressure on prices.
Meanwhile, Bulgaria is gradually nearing the price stability criterion required for eurozone membership. According to the EU-comparable Harmonized Index of Consumer Prices (HICP), inflation in Bulgaria held steady at 2.8% in July, the same level as in June. In contrast, Eurostat’s preliminary data showed that inflation in the Eurozone increased slightly to 2.6% in July. The Maastricht criterion for price stability is determined by comparing HICP data from the past 12 months with the lowest inflation rates among three EU countries. Based on current calculations, Bulgaria is closing in on this criterion. In May, Bulgaria’s inflation exceeded the Maastricht threshold by nearly 2%, but the current gap has narrowed to approximately 1.53 points.
Bulgaria’s inflation level stands at 4.308%, while the average inflation of the three countries with the lowest rates plus 1.5 points is 2.9%. Although this gap remains significant, trends suggest that Bulgaria may narrow this difference in the coming months. If progress continues, Bulgaria could request a new independent assessment from the European Commission and the European Central Bank. Should the assessment be favorable, a membership date could be established. Recently, due to ongoing political instability, Bulgarian lawmakers have instructed the government to seek new extraordinary convergent reports within two weeks of meeting the price stability criterion and to request an accession date of July 1, 2025, instead of the traditional January 1 date. (Novinite)