Inflation Hits New High in Bulgaria

19 10 2007 Sofia _ Bulgaria’s annual inflation rate accelerated in September to reach 13.1 per cent – along with Latvia, by far the highest in the EU.

According to the latest information from the National Statistics Institute (NSI), rising food prices, growth in wage levels and increased demand on the domestic market are the main drivers of the current inflationary spiral.

Research cited by Bulgaria’s National News Agency says central and east European countries are experiencing their highest inflation in recent times.

But they are well below Bulgaria’s level, with inflation in neighbouring Romania registered at present at 5.5 per cent.

Foreign experts predicted an abrupt drop in foreign investments, a reduction in economic growth and a worsening of the fiscal balance in Bulgaria.

Though the budget surplus is a healthy €5.4 billion, and the Bulgarian National Bank (BNB) reserves are growing faster than ever, there is a series of gloomy prognoses appearing in the Bulgarian media.

“There is no economic threat to Bulgaria right now“, Georgi Angelov, senior economist at the Sofia Open Society Institute, told Balkan Insight.

“The question is rather more political – will the government abandon its fiscal policy and start raising the salaries in the public sector, starting with the teachers”, he added.

Bulgaria’s teachers have been on a nationwide strike for nearly four weeks in a bid to secure a doubling of their salaries.

“In my opinion this [pay rise] is not very probable since the Socialist-led Triple Coalition is aware of the economic crisis, caused by a left-wing government ten years ago”, Angelov said.


While inflation is accelerating, analyst point out that the BNB’s reserves are now at their highest level in 10 years.(BIRN)