Infographic: Inflation slows slightly in May

Source: NSI

Comment:

In May, consumer price inflation slowed slightly to 3.51% year-on-year from 3.68% in April, according to the latest NSI data. There was no change in which types of goods recorded the highest price increases – food and beverages continued to lead the way with a 5.80% increase in their prices in May. On the other hand, prices for clothing and footwear continued to fall at the fastest rate – 0.99%. A breakdown by larger categories shows that prices for all types of food goods increased faster in May, but growth in prices for services and non-food goods slowed down.

A major factor behind the slower growth of non-food prices, and hence of the overall index, is the slight reversal of the trend in fuel prices. After several months of continuous growth, fuel prices remained largely unchanged in May, and this led to a noticeable slowdown in the growth of transport prices - 2.46% in May, compared to 3.83% in April. In the first weeks of June, the trend has already been clearly downward, so we can expect even slower growth in transport prices in the next edition of the consumer price index.

May marks the first slowdown in the inflation rate since December. It is too early to say whether this means a downward trend in the inflation rate in the near future, but it is very likely, especially if fuel prices continue to fall. As we mentioned last month, if nothing else, we are already seeing at least a stabilization in the inflation rate. In any case, we do not expect it to accelerate to or above 4% on an annual basis. And given that we have recently witnessed a slowdown in economic activity, both globally and in Bulgaria, it is very likely that we have already witnessed the absolute peak of inflation for the current business cycle.

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