Bulgarian National Bank projects income growth to outpace inflation

Board member Iliya Lingorski of the Bulgarian National Bank (BNB) said the bank’s latest forecast shows household income growth in Bulgaria will continue to exceed inflation in the coming years. He stressed that the projection is based on current conditions and does not predict the future.

Lingorski noted that since 2020 internal factors, especially rising private consumption driven by higher incomes, have become the main influence on price dynamics, outweighing external shocks. He cautioned that fiscal expansion that runs counter‑cyclical could fuel inflation.

Regarding the euro, a joint study by the European Central Bank and BNB found the currency conversion impact on inflation to be only 0.4%, and the effect has been negligible recently. About 95% of the levs in circulation have been withdrawn, with the remainder valued at roughly €800 million.

The BNB also highlighted that Bulgaria’s deposit base equals roughly 85% of GDP, higher than many EU peers, which keeps deposit interest rates low because banks face limited competition for funds and cannot lend at a rapid pace.