Electricity prices are expected to rise, a huge potential for a doubling of inflation, but inflation in Bulgaria is likely to slow down.

As reported by bourgas.ru, electricity prices are expected to rise, a huge potential for a doubling of inflation, but inflation in Bulgaria is likely to slow down. This was announced by the chairman of the Industrial Capital Association of Bulgaria – Vasil Velev.

“Inflation – at producer prices – is 40%. These are the prices at which companies buy and sell semi-finished products and raw materials. In the domestic market, the growth is 50%, and in the external market – 26%,” Velev said.

“I doubt that consumer inflation will be 40%. Mainly because two things are happening that can partially tame her. One of them is that it has a purely base effect – last year, inflation began to rise in September,” said economist Stoyan Panev.

“Just a higher base since September – purely mathematically – means that the inflation jump will be calculated from a higher base. This means that the rate of inflation – in terms of the index – will slow down. The other is that most of the world’s central banks, with the exception of the ECB, are tightening monetary policy, which should be a way to stop inflation,” he added.

The economist predicts that inflation is likely to slow down.

“It depends on the major central banks around the world. There is a tightening of interest rates, which is not happening in Bulgaria, because we are in the currency field. But even there the measures are ineffective. When you have a very small open economy, it is very difficult to stop this process with local measures,” he said.

“Inflation in the eurozone is two times lower than ours. The European Commission’s forecast for the whole year is 11.9% for Bulgaria and 6.1% for the Eurozone,” Velev said.

Inflation is stopped by a sharp increase in interest rates above its level in order to bring down the economy, reduce demand and thus lower prices, Panev said.

Today, according to most Bulgarian economists, a recession is needed to get inflation out of control.

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