Bulgaria's inflation to accelerate in Q2, Q3 - c-bank

Bulgaria's inflation to accelerate in Q2, Q3 - c-bank

Bulgaria's inflation is expected to gradually speed up in the second and third quarters of 2021, reflecting mostly the assumptions of upward developments in international food and petroleum product prices over this period compared with the end of last year, the country's central bank said.

The central bank expects a stronger increase in real gross domestic product (GDP) on a quarterly comparison basis in the second and third quarters if Bulgaria progresses in the following months toward achieving herd immunity against the coronavirus that would allow for a gradual easing of the containment measures and the country's major trading partners, the Bulgarian National Bank (BNB) said in the latest edition of its quarterly economic review published on Wednesday.

Bulgaria's consumer prices rose by 2% year-on-year in April following a 0.6% increase in March, the most recent data published by the national statistical office showed. On a monthly comparison basis, consumer prices grew by 0.7% in April, after adding 0.1% in the previous month.

Data published by the National Statistical Institute (NSI) also showed that Bulgaria's GDP fell by 1.8% year-on-year in the first quarter of 2021, following a 3.8% decrease in the fourth quarter of 2020. On a quarterly comparison basis, GDP rose 2.5% in the January-March period of 2021, after a 2.2% increase in the fourth quarter of last year.

The short-term economic indicators in the first quarter of 2021 show that economic activity will continue to increase, despite the extended period of the internal anti-epidemic measures, the BNB said.

At the end of last month, the government decided to extend the state of epidemic emergency until the end of July as the country still faces risks stemming from the new highly contagious COVID-19 variants due to its lagging vaccination campaign.

"In line with the international environment and trends in Bulgaria’s major trade partners, external demand for Bulgarian goods and services is expected to grow considerably on an annual basis in the second and third quarters of 2021, largely reflecting the low basis in 2020," the BNB said adding that this forecast is based on the assumption that a substantial part of the containment measures imposed in the fourth quarter of 2020 in other EU member states and in Bulgaria would be extended until the end of the second quarter of 2021.

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