Eurostat: Bulgaria has the second highest inflation in the euro area in October

Annual inflation in Bulgaria, measured by the Harmonised Index of Consumer Prices (HICP), rose to 6% in October from 5.6% in September, according to a Eurostat flash estimate released on 4 November and reported by BTA. That was the second highest rate among euro area members, behind Lithuania's 6.1%.

Euro area inflation was expected at 4% in October, up from 3.8% in September. Monthly inflation in Bulgaria was 0.8%, twice the euro area average of 0.4%.

Energy remained the main source of price pressure across the currency area. Eurostat estimated energy inflation at 20.8% in October, compared with 18.9% in September. Services prices rose by 3.3%, food, alcohol and tobacco by 1.6% and non-energy industrial goods by 1.2%.

Bulgaria is in its first year as a member of the euro area, and the October figures show inflation running about two percentage points above the average. Bulgarian National Bank Governor Dimitar Radev said at a forum in Sofia on 3 November that euro area membership significantly reduces external risks but does not remove domestic ones, BTA reported. He pointed to the gap between Bulgaria's 5.6% in September and the euro area's 3.8% as evidence that domestic price pressures remain stronger.

The HICP is the measure the European Central Bank uses for its 2% medium-term target. A persistent inflation gap matters for Bulgarian businesses because the country now shares a single interest rate with economies where prices are rising more slowly, while local wages, rents and input costs reflect domestic conditions.

Bulgaria's National Statistical Institute measures inflation with the national consumer price index as well, which showed 6.1% in October, slightly above the harmonised measure.