Bulgaria: Is Inflation Galloping?

Finance | May 16, 2022, Monday // 08:59|  views


In the last half-year, the phrase "galloping inflation" has been persistent. It is used not only by opposition politicians in their efforts to accuse the Bulgarian government of failing to address the issues, but also by business representatives who are pushing for government help with this argument. The phrase also reflects the public "feeling of inflation", which is invariably greater than what the statistics show. At the same time, wage growth, although in a number of areas below the levels expected by those employed, can also be said to be galloping, even faster.

Inflation is high, but such a term – ‘galloping inflation’, in the economy does not exist”, commented to the Bulgarian media "Dnevnik" Lubomir Datsov, former Deputy Minister of Finance. "It can't be economic. It's a socio-political term to show that inflation is running wild like a horse," he added.

The National Statistical Institute does not use terms such as "galloping inflation" and "hyperinflation", which are dynamic and, in many cases, subjective concepts. “We calculate consumer price indices on a monthly or annual basis, but our role is not to interpret and label economic processes. This is in the field of activity of macroeconomists”, the institute told Dnevnik.

"We are talking about galloping inflation if it grows by weeks, not months," BSP MP Rumen Gechev, Minister of Economy in Videnov's cabinet, and a current lecturer at the University of National and World Economy, said in a television interview some time ago.

The economist and MP from "Democratic Bulgaria" Georgi Ganev also notes that the phrase "galloping inflation" has recently started to be widely used in Bulgaria. In his publication in Forbes, he defended the thesis that galloping, when talking about economic indicators, may be present with inflation below 2% and when it is 20%. The reason is that it is not just about the rate of growth, but about denoting a process "that continues to be sustained due to the speed already gained, no matter how high it is." He also added that at the same time no one was talking about galloping incomes.

We have infinitely high inflation compared to what it was before, but the growth of income - including pensions, in Bulgaria in recent years is significantly ahead of that of inflation. Here is what the data from the National Statistical Institute for the last year show.

It is the increase in income and aid that the government is currently preparing that are factors that stimulate consumption, and hence inflation. Another factor that is also expected to have an effect in this direction is the costs that will come from projects, from EU funding under the national recovery and sustainability plan.

Data from the National Statistical Institute show how average gross wages and inflation have risen in the last year and in the first quarter of this year. The growth is compared to the corresponding month of the previous year.

Growth in average gross wages and inflation compared to the same month last year

Red: Wages
Blue: Inflation

/Tatiana Dimitrova, Dnevnik

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Tags: inflation, galloping, Bulgaria, increase


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