Jump in prices of basic foodstuffs aggravates cost of living in Bulgaria

Written by on September 20, 2012 in Bulgaria, Business, News, Perspectives - No comments

Bulgarian consumers have been hit by sharp increases in the prices of some basic foodstuffs in the past few months, which have added to the cost of living already made more difficult to cope with because of rising fuel and other prices.

The price of chicken meat was reported by mid-September to be seven per cent higher than at the beginning of June, while the wholesale price of pork has increased by 15 per cent. Meat prices are being driven upwards by global prices of grain.

Since the beginning of August, flour has risen in price by 10 per cent while the price of eggs is up by 14 per cent. The prices of white and yellow cheese also have risen, albeit to a lesser extent, during this time.

About a third of Bulgarian household income goes on spending on food, going by National Statistical Institute figures released earlier in 2012.

According to official statistics, the overall index of consumer prices shows inflation from the beginning of 2012 to August to have been 2.6 per cent.

However, August saw fuel prices hit record highs, with the price of a litre of A95, commonly-used in light vehicles, reaching 2.79 leva (about 1.39 euro). This was higher than previous peaks in March 2012 and August 2011.

Going by calculations reported by public broadcaster Bulgarian National Radio, this means that a Bulgarian on an average salary can buy 220 litres of A95 a month, less than their counterparts in Romania, Hungary and Lithuania. Various factors affect fuel prices in Bulgaria – prices of crude on international markets, the Iran fuel trade embargo, the weakening of the lev against the dollar, the profits wanted by oil refineries and distributors that have major market presence in the Bulgarian market and government reluctance to ask Brussels to agree to lower excises on fuels, the latter already below EU minimums.

Electricity and natural gas prices went up as of July 1, and higher prices of heating will bring discomfort when winter arrives. BNR predicted that 2013 is likely to see large increases in electricity prices as businesses are required to meet targets to reduce carbon dioxide emissions.

Economists at Bulgaria’s two major trade union federations say that the higher cost of living will have a knock-on effect on consumption and thus on the economy as a whole. According to figures released at the end of August by European Union statistics office Eurostat, at 12.4 per cent, unemployment inBulgariain July 2012 was higher than both the averages for the EU and for the 17-member euro zone.

All of these factors are certain to come into play inBulgaria’s summer 2013 national parliamentary elections, when opposition parties are likely to bring into play cost-of-living issues.

This is the background to moves by the centre-right GERB government headed by Prime Minister Boiko Borissov, elected in July 2009, to increase pensions in 2013 as well as raising the minimum salary threshold. The government has signalled that it intends pension increases to compensate for the accumulated inflation of close to 11 per cent over the past three years, but there have been mixed signals about the amount by which pensions will increase, and when the increase will take effect. Current announcements suggest a pension increase in the seven to eight per cent range.

Pensions inBulgariacurrently average 250 leva (about 125 euro). According to calculations by the Confederation of Independent Trade Unions in Bulgaria (CITUB) released earlier in 2012, to meet the cost of living in March, the average income per household member should have been 560 leva a month. If you prefer, for a household of four, that means a monthly household income of 2240 leva, to cover spending on food, housing, clothing and a holiday “in conformity with Bulgarian standards”. But the picture used by CITUB was of a household of four made up of two adults and two children, meaning that each adult should be getting 1120 leva.

National Statistical Institute figures put Bulgarian average monthly income at 760 leva, reporting that this figure increased in both of the first two quarters of 2012 – but it should also be taken into account that the number of people on labour contracts (meaning, salaried jobs) has decreased; as per those unemployment figures above.

The government has said that it would increase teachers’ salaries and there have been indications about pay increases elsewhere in the public service, reportedly including staff at nursing homes, the Agency for Social Assistance and the Employment Agency. A clearer picture will emerge only when the Budget is finalised and tabled in Parliament.

Some further notes on Bulgarians’ income and spending. According to National Statistical Institute data released in June, the rate of increase of spending by Bulgarians was higher than income growth, an obvious consequence of rising costs.

But further too, the occasional busts of people for concealing of income, as per the periodic announcements by the Interior Ministry and especially the National Revenue Agency, indicate that official statistics on incomes may not be entirely accurate; allowing for the fact that some of those bust, owners of yachts and luxury German cars, may not be having quite as tough a time as a family in a panel block worried by the lengthening shadow of their coming winter heating, fuel and food bills.

(Photo:  pixaio.blogspot.com)

 

 

 

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About the Author

Clive Leviev-Sawyer is the Publisher and Editor-in-Chief of The Sofia Globe. He is the author of the book Bulgaria: Politics and Protests in the 21st Century (Riva Publishers, 2015).