How the Change from the Lev to the Euro Affected Prices in Bulgaria: An ECB Analysis

Bulgaria's transition from the lev to the euro has so far had a limited and largely one-off impact on consumer prices. This is indicated by experts from the European Central Bank (ECB) in an analytical material published on the institution's blog.

According to estimates, the inflation effect from the introduction of the single European currency on January 1, 2026, amounts to between 0.3 and 0.4 percentage points. The increases are mainly concentrated in the service sector, with some of them recorded even before the transition itself.

At the same time, neither perceived inflation nor households' inflation expectations were significantly affected by the currency change.

The inflation effect from the introduction of the euro in Bulgaria is calculated at 0.3 to 0.4 percentage points, according to the results of a study using simulation models, conducted by the experts. This preliminary assessment generally coincides with the findings of earlier studies of the transition to the euro, which usually indicate slight, one-off effects concentrated in certain parts of the service sector. These sectors are often characterized by more differentiated products and a stronger local dimension, which may limit the intensity of competition and facilitate companies in adapting prices, the publication states. 

The data show that in the first months after the introduction of the euro, the annual inflation in Bulgaria, measured by the Harmonized Index of Consumer Prices (HICP), continued to slow down – from 3.5 percent in December 2025 to 2.3 percent in January and 2.1 percent in February. On a monthly basis, however, a slight increase of 0.6 percent was recorded in January, mainly due to the increase in the prices of food and services.

Experts note that in previous transitions to the euro, a discrepancy between perceived and real inflation was often observed. This difference in perception may reflect consumers' greater sensitivity to the prices of frequently purchased goods and services, and unfamiliarity with the new currency and significant media attention to price trends may also play a role. In Bulgaria in January 2026, perceived inflation even recorded a significant decline – the largest since the beginning of the COVID-19 pandemic, although consumers who report a price increase still prevail.

In parallel, inflation expectations for the next 12 months are also falling, which, according to the analysis, confirms that the effect of the introduction of the euro on price attitudes is limited.

There is also an increase in public support for the single currency. The share of approval exceeded 50 percent in January 2026 and reached 54 percent in February, which is the first stable majority in recent years. According to the ECB, this trend is in line with the experience of other countries that have introduced the euro and reflects the weakening of the initial concerns.

The analysis covers the first two months after the introduction of the euro, as the effects on prices are usually concentrated in the initial period, as shown by the experience of countries like Croatia.

Experts warn that subsequent events in 2026, including the external price shock related to the conflict in the Middle East, may have a significant impact on inflation and make it difficult to distinguish the effects of the currency transition.