Infographic: Consumer inflation accelerates in January 2019

Source: NSI

Comment:

In the first month of 2019, consumer price inflation accelerated to 2.96% year-on-year from 2.67% in December, according to the latest NSI data. The highest growth rate was recorded in the category of "entertainment and culture" (8.35%), while the largest decline was recorded in transport prices (-2.55%). The NSI's alternative breakdown by larger categories shows that services prices continued to grow at the fastest pace in January, followed by food in second place and non-food goods in third place in terms of growth rate.

The decline in transport prices is a completely logical development given the fact that from the end of October to the beginning of January, fuel prices in the country fell almost continuously. Thus, in January this year, the price of gasoline in Bulgaria was 13 stotinki lower than in January 2018. However, in early February, prices started to rise again, so the downward trend in transport prices is very likely to reverse in the next price statistics of the National Statistical Institute.

Although the consumer price index grew at a faster pace in January than in December, we believe it is unlikely that we will witness a sustained acceleration in the pace of inflation this year. First of all, because it is already obvious that the European Union economy as a whole has passed the peak of growth within the current business cycle. In 2019, we will most likely witness a slowdown in growth in Bulgaria as well. Slower growth means slower income growth and hence – slower growth in consumer prices.

A slowdown in growth is already being felt in the second half of 2018, if we just look at the flash estimate of GDP growth in the last quarter of last year, which was published on Thursday. The data shows that from 3.5% in the first quarter, GDP growth slowed to 3.1% in the fourth. For now, there is no reason to expect a reversal in this trend, especially considering the slowdown that some large European economies (and key markets for Bulgarian exports) such as Germany are starting to experience.

Infographics: Natalia Chomakova
Commentary: Georgi Vuldjev

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