Bulgaria's Inflation Drops to 2.4% in July, Closing In on Eurozone Criteria

In July, inflation in Bulgaria slightly decreased to 2.4% on an annual basis, according to recent statistics from the NSI. However, compared to the previous month, the inflation index rose by 0.8%, reversing a trend of decline observed in recent months. This increase is primarily attributed to higher prices for tourist services and establishments. Seasonal factors contribute to this rise, but year-round, the main drivers of inflation remain the costs associated with restaurants, hotels, transport, and general services.

Looking ahead, inflation is expected to continue its deceleration in the second and third quarters of 2024. Nonetheless, strong consumer demand and rising labor costs are anticipated to maintain upward pressure on prices.

Meanwhile, Bulgaria is gradually nearing the price stability criterion required for eurozone membership. According to the EU-comparable Harmonized Index of Consumer Prices (HICP), inflation in Bulgaria held steady at 2.8% in July, the same level as in June. In contrast, Eurostat's preliminary data shows that inflation in the Eurozone increased slightly to 2.6% in July. The Maastricht criterion for price stability is determined by comparing HICP data from the past 12 months with the lowest inflation rates among three EU countries. Based on current calculations, Bulgaria is closing in on this criterion. In May, Bulgaria's inflation exceeded the Maastricht threshold by nearly 2 percentage points, but the current gap has narrowed to approximately 1.53 points.