Bulgaria’s caretaker Finance Minister: A rise in fuel prices could lead to a spike in inflation

A rise in fuel prices could lead to a spike in inflation, Bulgaria’s caretaker Finance Minister Georgi Klisurski told Nova Televizia on March 23.

“If prices stay at 1.60 euro (a litre), I don’t expect a dramatic jump, if they continue to rise, transportation services will increase, and then food. We all hope that the original source of the problem will disappear, namely the conflict in Iran,” Klisurski said.

“For us in the caretaker government, it was important that the support measure due to the increase in fuel prices was truly aimed at those most in need,” he said.

Klisurski said that if the fuel price reaches 1.70 euro a litre, then inflation on an annual basis could increase by half to one per cent. Currently, it is around four per cent, he said.

The caretaker cabinet is considering another measure aimed at the transport sector – not to increase toll fees for vehicles over 3.5 tons from April 1.

“The additional revenue that the budget expected from the increase in toll fees is within the range of about 60 million euro by the end of the year. Our proposal is that these 60 million euro should remain in the business, not to burden them with this additional expense,” he said.

Energy sources and producers are the primary source of higher electricity prices, so compensation for business would be a good measure, Klisurski said.

“The funds could come from excess profits – from the Electricity System Security Fund. Taxpayers will not have to pay out of their own pockets. This way, the price of electricity will not be high for business,” he said.

Svetoslav Benchev, chairman of the Bulgarian Oil and Gas Association, told bTV on March 23: “It seems to me that the price of a barrel will go up because the situation in Iran continues to escalate. If the Strait of Hormuz remains closed, this means increasingly higher prices for oil and, accordingly, for fuels”.

“If it remains closed, it means ever higher prices for oil and, accordingly, for fuels. Unfortunately, yesterday, the chairman of the International Energy Agency said that this is the most severe crisis, perhaps, that has ever been experienced with oil products – even more severe than the one in the 1970s,” Benchev said.

“Things, at least at the moment, do not look optimistic at all, but what exactly the crude oil prices will reach depends entirely on the escalation of the conflict in Iran,” he said.

Benchev said that diesel at some fuel stations has already reached 1.60 euro a litre.

“Our prices are extremely good compared to what is happening in the European Union. A report from March 19 – the latest from the European Commission – shows that we are 50-52 euro cents cheaper per litre of fuel, regardless of whether it is fuel or diesel, than the average price in the European Union. And almost 30-40 cents cheaper than Romania, ” he said.

In Bulgaria, according to the fuelo.net website, while the average price of a litre of A95 petrol was 1.25 euro on February 27 (the day before the beginning of the US-Israeli attacks on Iran), as of March 23 it was 1.44 euro.

While the average price of a litre of diesel was 1.29 euro on February 27, as of the afternoon of March 23 it was 1.60 euro, according to the website.

(Photo: Kiril Havezov/ sxc.hu)