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|
|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|
|Recreation and culture||4.3||0.2||0.2||-2.7||-3.8||-4.0||-3.1|
|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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