Bulgarian National Bank says internal factors, not euro, drive inflation

The Bulgarian National Bank (BNB) forecast that household incomes will continue to grow faster than consumer‑price inflation in the coming years. According to board member Iliya Lingorski, rising real disposable income and strong private consumption are the main drivers of economic growth and will remain the principal source of inflationary pressure.

BNB’s analysis indicates that internal economic factors now outweigh external influences in shaping price levels. The bank estimates the direct effect of Bulgaria’s euro‑conversion on inflation at about 0.4 percentage points, a contribution it deems marginal compared with domestic demand dynamics. June data showed annual inflation at 5.3 %, the second‑highest rate in the eurozone after Lithuania’s 5.5 %.

Lingorski also warned that fiscal expansion that runs counter‑cyclical, energy‑price shocks, and geopolitical tensions could sustain higher inflation. The BNB expects core inflation to stay the key driver through 2026, while private consumption’s share of GDP was close to 8 % last year, far above the eurozone average of under 2 %.