Inflation picks up in July

Latest reading: Inflation came in at 5.3% in July, up from June’s 4.4% and hitting the highest inflation rate since November 2023. Price pressures for food—representing roughly a third of the consumer basket—rose for the seventh consecutive month, accelerating at the quickest pace in nearly two years, in line with the ongoing impact of the restoration of standard VAT rates on bread, flour, restaurants and catering in January. Moreover, price growth for housing and utilities strengthened from June, and prices for transport fell at a softer rate. The trend pointed up, with annual average inflation coming in at 3.2% in July (June: 2.9%). Meanwhile, harmonized inflation rose to 3.4% in July from June’s 3.1%. Lastly, consumer prices increased 1.69% in July over the previous month, picking up from June's 0.44% rise. July's figure was the highest reading since January.

Panelist insight: EIU analysts commented on the outlook: “We expect inflation to ease in the coming months, supported by the euro's (and thus the lev's) appreciation, which is lowering imported price pressures, and by the EU-US trade agreement, which means that we do not expect retaliatory EU tariffs. Weaker than expected growth in 2025—particularly driven by a slowdown across the EU—could lead to lower than expected inflation.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Bulgarian inflation projections for the next ten years from a panel of 16 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for Bulgarian inflation.

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