Bulgarian Experts Fuel Inflation Fears for 2012

Bulgaria's consumer price inflation slowed in September and hit a thirteen-month low on the back of shrinking consumption and a good harvest. Photo by Sofia Photo Agency

Bulgaria's consumer price inflation has recently slowed down on the back of weak consumption, but prices are bound to increase next year, according to local analysts.

"The comparatively low inflation now is simply the result of the stagnation in consumption. All indices show that we will see higher prices next year," Petar Ganev from the Market Economy Institute, a Sofia-based think-tank, commented for Darik radio.

According to him next year's budget should provide for more buffers to stave off problems.

"It is important that the government manages to reduce the budget deficit, because otherwise, even it provides for more buffers in the budget, a swelling deficit could tip the scales and dash all projections," he added.

Bulgaria's consumer price inflation slowed in September and hit a thirteen-month low on the back of shrinking consumption and a good harvest, data of the statistics office showed earlier this month.

The consumer price index increased 3.3% on an annual basis in September, after a 4.1% increase in August.

Month-on-month, consumer prices remained flat in September, after edging down by 0.3% in August.

Prices of food increased by a slim 0.1%, alcohol beverages and cigarettes – 0.2%, while clothing and footwear prices moved up 0.7%.

There was a 2.2% annual growth in housing costs and utility prices, and a 7.6% rise in transportation costs in September.

Services in the tourism sector saw the sharpest fall in prices – leisure activities prices went down by a whopping 4%.

Meanwhile the harmonized index of consumer prices, which takes into account the consumption of foreigners in the country and is measured under the EU methodology, increased by 2.9% on an annual basis and remained flat on a monthly basis.

The International Monetary Fund expects higher food and fuel prices to increase inflation to 4.25% in 2011, before easing to 3% in 2012.

The government's forecast has set inflation at 3.6% in 2011.

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