Infographic: Inflation remains below 3% in July

Source: NSI

Comment:

In July, consumer price inflation accelerated slightly to 2.93% year-on-year, from 2.83% in the previous month, according to the latest NSI data. Despite the slight acceleration, inflation remains below the 3% level it has been at over the past year, and June and July are the first two consecutive months since spring 2018 in which consumer inflation has been below 3%. It is noticeable that inflation in non-food goods slowed down significantly in July, reaching only 0.25%, compared to 0.73% in June. This is the lowest level of inflation in this category of goods since the end of 2016. Meanwhile, there is a slight increase in inflation in food goods and a slightly more serious increase in services.

A detailed breakdown of the data shows that restaurant and hotel prices continue to grow the fastest, by almost 6% in July, which is not surprising, given that summer is the tourist season. Communications prices continue to fall at the fastest rate. Deflation in transport prices is slightly increasing, mainly due to slightly lower fuel prices at the moment compared to the summer of last year. Given their trajectory this month, we can expect the NSI to report a decline in transport prices in August as well.

Overall, it seems that inflation will stabilize around 3% in the coming months, and in the longer term we expect an even more serious slowdown in its pace. Economic activity in Bulgaria is still growing at a relatively high rate, but major European economies such as Germany are already experiencing a serious slowdown in growth and fears of a global recession next year are becoming increasingly relevant. In this context, even with a more aggressive monetary stimulus from the ECB (which will most likely come in the fall), inflation is likely to continue to slow across Europe.

Did you like it? Take a minute to support the EKIP on Patreon!