Bulgaria's CPI falls 1.6% y/y in December 2013, down for fifth consecutive month

By bne IntelliNews January 15, 2014

Bulgaria marked the fifth month of deflation in terms of falling consumer prices as the CPI declined 1.6% y/y in December 2013, following a drop of 1.5% in November, according to statistics office data. The increase in consumer purchasing power was largely due to a decline in regulated prices, cheaper food and lower international prices of energy commodities. In monthly terms, the CPI inched up 0.3% in December, versus a 0.2% decline in November.

The drop in prices recorded in the last five months of the year slowed down the annual average inflation to 0.9% in 2013 from 3.0% in 2012.

The two administratively imposed cuts in the price of electricity from last year (by 7% in March 2013 and by 4.3% in August) have been the main internal deflation-driving factor. The price of electricity was down 11% y/y in December and heating costs fell 10.5% y/y. Accordingly, the housing and utilities sub-index of the CPI recorded a 7.2% annual drop that month, reflecting also a 0.4% y/y decrease in renting costs and a 0.8% y/y rise in the price of water.

Food prices slid by 0.8% y/y in December thanks to large domestic and foreign supplies. The UN reported last week that its FAO Food Price Index averaged 209.9 points in 2013, down 1.6% from 2012. Large stock of cereals and sugar pushed down the prices Bulgarian consumer paid for in December by 2.3% y/y and 5.3% y/y, respectively. The cost of animal fat and vegetable oil fell 8.3% y/y, meat cost 1.5% y/y less, fish prices were down by 2.9% y/y.

The statistics office also informed that the EU-harmonised CPI (HICP), used as a benchmark for the euro adoption, fell 0.9% y/y in December but edged up 0.4% on a monthly basis.

The central bank (BNB) expects a slow increase in inflation in the first quarter of 2014 under the influence of slowly growing food and energy prices. The government has forecasted 1.8% annual average inflation for this year.

Bulgaria's CPI, y/y, % Weight in the basket, % Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Total 100 0.5 -0.7 -1.6 -1.4 -1.5 -1.6
Food 36.4 3 1.2 -0.3 0.3 0.0 -0.8
Alcoholic beverages and tobacco 5.3 0.7 0.7 0.7 0.9 1.2 1.5
Clothing and footwear 3.8 -0.6 0 0.2 0.3 -0.4 -0.7
Housing, water, electricity, gas and other fuels 17.8 -3.4 -5.7 -6.1 -6.6 -7.1 -7.2
Furnishings, household equipment and routine household maintenance 3.6 -0.4 0.7 -0.5 -1.0 -0.8 -0.8
Health 6.4 -3.7 -3.7 -3.1 -2.2 -2.0 -1.8
Transport 8 -0.5 -1.9 -3.2 -2.5 -1.0 1.3
Communication 5.4 -0.4 -0.5 -0.3 0.4 0.5 0.1
Recreation and culture 4.3 0.2 0.2 -2.7 -3.8 -4.0 -3.1
Education 0.4 3.8 3.8 2.7 0.9 0.9 0.9
Restaurants and hotels 5.1 4 4.1 3.4 2.8 2.6 2.3
Miscellaneous goods and services 4.3 1.2 0.8 0.2 0.3 0.7 0.8
Source: statistics office (NSI)              

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