Bulgaria: Inflation falls to lowest level since August 2021 in January
Inflation came in at 3.8% in January, down from December’s 4.7%. January’s reading marked the weakest inflation rate since August 2021. Looking at the details of the release, prices for food and non-alcoholic beverages rose at a more moderate pace in January. In contrast, prices for housing, water, electricity, gas and other fuels rose at a stronger pace.
Annual average inflation fell to 8.4% in January (December: 9.5%). Meanwhile, harmonized inflation fell to 4.0% in January, from the previous month’s 5.0%.
Finally, consumer prices rose 0.50% in January over the previous month, accelerating from December’s 0.27% increase. January’s uptick marked the highest reading since July 2023.
Analysts at UniCredit commented on the outlook:
“We expect disinflation to slow in 2024 and particularly in 2025. Somewhat lower commodity prices envisaged in our global baseline macro scenario will help reduce consumer-price inflation in 2024 […]. At the same time, double-digit labor-cost increases are likely to keep service prices sticky, while the withdrawal of VAT cuts envisaged in the 2024 state budget will put pressure on the prices of some essential goods, such as bread, flour, electricity, gas and central heating. Finally, there are several sectors in the local economy where companies have significant pricing power, which is likely to further undermine the strength of disinflationary forces acting in the period of the forecast.”