Economists warn: Inflation in Bulgaria is yet to accelerate

After a year of relative price stabilization, inflation in Bulgaria is picking up speed again, and a number of economists are warning that the worst is yet to come. Data for the first months of 2026 show a sharp acceleration in price growth, while official forecasts remain relatively moderate, fueling concerns that the real inflationary pressure is being underestimated.

Official forecasts look "calm," but risks are growing

According to the spring macroeconomic forecasts of European and local institutions, the Bulgarian economy is expected to grow by about 2% in 2026, with inflation gradually stabilizing around 4–4.5% annually.

The Bulgarian National Bank, in its latest "Economic Review," points to a baseline scenario in which annual inflation at the end of 2026 reaches about 4%, and average annual inflation – about 3.7%, with a smooth deceleration towards 2027–2028.

At the same time, in alternative – adverse and severely adverse – scenarios, the central bank itself admits that inflation could prove to be significantly higher – by over 1 percentage point in 2026 and by over 3 percentage points in 2027 compared to the baseline scenario, if external shocks and secondary effects along supply chains intensify.

An analysis by an independent research center on inflation trends also emphasizes that the consolidated forecast of official institutions for 2026 is "at high risk of being exceeded," which confirms the feeling of businesses and households that prices are rising faster than expected.

Statistics show a sharper acceleration than expected

The latest data from the National Statistical Institute paint an alarming picture: after a period of deceleration in 2025, inflation is accelerating again, with flash estimates for April 2026 showing annual price growth of over 7% – compared to about 4% a month earlier.

Preliminary Eurostat estimates for the same period place Bulgaria at the top of the negative ranking for price growth in the Eurozone, with annual inflation above 6%, while the average for the currency union remains significantly lower.

The structure of the price increases is particularly telling: the fastest growth is recorded in "Transport," "Clothing and footwear," and "Food and non-alcoholic beverages," which directly hits the daily budget of households. In transport, the monthly growth exceeds 10%, in clothing and footwear – nearly 8%, and in food – over 2%.

The data also show an acceleration in so-called core inflation – for goods and services excluding energy and food, which suggests that the inflationary process is already "baked in" deeper into the economy and will not be exhausted just by the fading of energy and external shocks.

Economists: "Higher inflation in 2026 is almost certain"

More and more economists are warning that official scenarios for moderate price increases may prove too optimistic. In television interviews and analyses, a consensus is emerging that inflation in 2026 will be higher than in 2025, especially in the food and services segments.

Economist Vladimir Sirkarov, for example, emphasizes that "we have a serious rise in prices" in our country, with "foodstuffs being the most key," and strong inflationary pressure is already being observed along the lines of "restaurants and tourism." According to him, even a short-lived "lull" at the beginning of the year does not change the trend toward higher inflation in 2026 compared to the previous year.

Other experts are even more categorical and speak of a "painful revelation" – that real inflation may turn out higher than officially presented. They note that households feel a significantly stronger rise in the prices of food, services, and rent than aggregated indices show, and "there is no way for the entire population to be compensated for the jump in prices."

The Fiscal Council and other expert bodies are also warning of the risk of a scenario with "higher inflation and weaker growth" – i.e., real stagflation. In a pessimistic scenario, economic growth could shrink to about 1% for the year, while inflation exceeds 5%, which would simultaneously hit incomes, employment, and public finances.

Factors that will push prices upward

The main drivers of the future acceleration of inflation in Bulgaria are several, and most of them are already in effect.

First, the external environment remains extremely unstable: the energy shock provoked by the ongoing conflict in the Middle East continues to keep fuel prices and transport costs high. This directly transfers to the final prices of goods and services in our country.

Second, domestic demand is strengthening against the backdrop of increased wages, labor shortages, and rising labor costs. Businesses are passing a significant portion of these costs on to consumers, especially in the "restaurants, hotels, and tourism" sectors, where margins were compressed in recent years.

Third, changes in the social security burden and tax adjustments are pending, which, according to financial analysts, will have an additional inflationary effect, especially if combined with higher administratively determined prices (fees, services, utility costs).

Fourth, the effect of the introduction of the euro – although officially estimated at "only" 0.3–0.4 percentage points – may prove stronger on a psychological level. Historical experience from other countries shows that part of the business sector uses such transitions to "round up" prices.

What accelerated inflation means for households and businesses

For households, accelerated inflation means real impoverishment if incomes fail to keep up with price growth. Vulnerable groups are the most strongly affected – pensioners, low-income workers, and large families, for whom the costs of food, transport, and housing take up the main part of the budget.

The rise in food and service prices "eats away" at savings and calls into question the ability of households to service loans, especially in the event of a possible rise in interest rates if the European Central Bank continues tightening monetary policy.

For businesses, higher inflation means greater uncertainty in planning, higher costs for raw materials, energy, and labor, as well as greater pressure on prices for end customers. Small and medium-sized enterprises are particularly vulnerable, as they have limited access to financing and find it harder to pass costs on to the client without losing market share.

In macroeconomic terms, the combination of slowing growth and accelerating inflation can lead to lower investments, weaker consumption, and a risk of a more prolonged period of stagflation, in which the standard of living of the population erodes and social tension increases.

Are there tools to control inflation?

Economists are relatively united that there are solutions against inflation, but "there is no one to implement them consistently enough." Among the key measures are stricter fiscal discipline, limiting low-efficiency spending, and better targeting of social benefits.

It is also necessary to improve the competitive environment – especially in sectors with high regulatory pressure and a limited number of players, where the risk of cartel practices and "quiet" price hikes is greater.

From a monetary point of view, the task is complex: Bulgaria is in a currency board and does not have an independent interest rate policy, largely following the course of the European Central Bank. This means that the tools for fighting inflation are concentrated primarily in the sphere of the budget, structural reforms, and market supervision.

The question is whether the political system will manage to bear the cost of unpopular measures – from cutting inefficient expenses to stricter control over abuses – before inflation becomes a permanent problem that undermines trust in institutions and the prospects for catching-up development.

Against this background, the warning from economists sounds clear: "Inflation in Bulgaria is yet to accelerate if timely and consistent measures are not taken." Otherwise, the country risks returning to a spiral of high prices, low growth, and increasing social tension.