Bulgaria: Inflation rises to two-year high
April 12, 2011
In March, consumer prices rose 0.56% over the previous month, which was less than half the 1.23% increase recorded in February. The monthly rise can be attributed to price increases for transport (+1.75% month-on-month) as well as for food and non-alcoholic beverages (+1.28% mom). Annual inflation rose from 5.2% in February to 5.6%, the highest level since February 2009, but undershot market expectations of 6.1%. Annual average inflation rose from 3.1% in February to 3.5% in March. As Bulgaria's currency board limits the use of interest rates to tackle rising food and oil prices, policy makers met with transport and fuel companies on 23 March, in an attempt to reduce costs by lowering mandatory levels of fuel reserves. In addition, Lukoil Neftochim AD, Bulgaria's sole refinery, agreed to freeze prices for a month to ease escalating fuel prices. Meanwhile, at its latest policy meeting on 31 March, the Central Bank raised the base interest rate to 0.19%, up marginally from the previous 0.18%. The government expects inflation to average 3.6% this year.