Bulgaria's June inflation falls but annual rate stays above 5% amid growing budget deficit

In June 2026 Bulgaria's consumer price index dropped 0.9% month‑on‑month, yet the annual CPI remained at 5.4% and the harmonised index (HICP) at 5.2%, the highest in the euro zone. Prices fell most sharply in transport, driven by cheaper fuels – propane‑butane fell 14.1%, diesel 9.4% and gasoline 0.4% – and in food items such as cucumbers (‑25.8%) and tomatoes (‑20.2%). Some services, notably restaurants and hotels, rose by 1.5% and accommodation by 6.3%. The small‑basket price index, which tracks essential goods for low‑income households, rose 0.5% month‑on‑month and 2.7% year‑on‑year.

Despite the monthly relief, cumulative inflation over the past three years reaches 12.8% and 43.3% over five years, keeping pressure on households. The government announced €60 million of incentive measures for businesses and stressed fiscal discipline without harming competitiveness. Parliamentary committee chair Stefan Belchev warned that billions cannot be hidden and outlined plans for the 2027 budget to bring the deficit within the 3% Maastricht limit.

Since adopting the euro on 1 January 2026, Bulgaria has faced a sharp rise in its fiscal gap – the 2025 deficit is projected at 3.5% of GDP, 2026 at 4.1%, and the draft 2027 budget foresees up to 5.7%. Public debt is expected to climb from 29.9% to 35.5% of GDP by 2027. Meanwhile, consumer spending remains robust: retail turnover grew 7.9% year‑on‑year in May and discretionary expenditures on travel, entertainment and services continue to increase.